Power Finance Corp. has approached banks for a three-year loan after initially seeking to borrow for five years, according to three people familiar with the matter.
The state-owned Indian lender to power projects revised its loan plans after receiving feedback from banks on the cost of borrowing for a longer duration, the people said, asking not to be identified as details are private. The company is seeking Reserve Bank of India approval for its revised plans, the people said.
R. Nagarajan, Power Finance’s New Delhi-based finance director, didn’t answer three calls to his mobile today seeking comment on the loan.
India’s government restricts the amount and terms of foreign loans for companies. While it raised the cap on foreign borrowings that don’t need approvals to $750 million from $500 million in September, so-called external commercial borrowings greater than the equivalent of $20 million have a mandatory minimum average maturity of five years.
Power Finance borrowed $260 million for six years in March last year and agreed to a margin of 165 basis points more than the London interbank offered rate, according to data compiled by Bloomberg.