(ET)
India’s biggest oil explorer Oil and Natural Gas Corp is looking to raise US$1bn in the onshore market, in the first big deal to target foreign-currency deposits with domestic lenders. The one-year loan would set a benchmark for size and pricing in the onshore US dollar market, where financings typically come in small sizes of US$30m-$50m. It also offers Indian banks a rare opportunity to invest in one of the country’s top borrowers, since ONGC typically funds in dollars to match its cash flows.
Foreign currency non-resident (FNCR) accounts are fixed deposits in foreign currencies, such as US, Canadian and Australian dollars, yen, euros and pounds sterling belonging to non-resident Indians (NRI) or persons of Indian origin (PIO). According to the Reserve Bank of India’s website, outstanding FCNR deposits as of February this year totalled US$21.84bn. ONGC’s pursuit of the FCNR liquidity comes at a time when Indian banks are wrestling with non-performing loans in an environment of risk aversion, declining business opportunities and corporate governance issues.
