AfrAsia Bank pioneers the idea of Offshore INR Funds through The ‘Masala Loan’ in Mauritius

AfrAsia Bank has extended this 'Masala Loan' transaction by offshoring INR funds structured under the External Commercial Borrowings (ECB) policy framework of the Reserve Bank of India. Through the Masala Loan, AfrAsia Bank has offered an auxiliary option to IFIN by enabling the company to borrow funds in INR to on-lend to corporates in various sectors on the Indian front. This new offering reflects the bank’s commitment to enable its Indian counterparty to benefit from its expertise on Asian markets whilst simultaneously enhancing its know-how on Indian capital markets but is also contributing towards reinforcing the Indo-Mauritian relationship.

Sanjiv Bhasin, Chief Executive Officer, AfrAsia Bank stated “Our objective is to make Mauritius a robust and cost effective debt market for Asian Corporates to raise and trade in debt .The Mauritian financial centre has a large pool of foreign currency resources. This provides Indian companies alternative funding sources coupled with favourable withholding tax rates. We are also looking at other Asian jurisdictions like Sri Lanka, Bangladesh, Indonesia and the Philippines where the GDP growth seems encouraging and risk perception is superior”.

“With the booming Indian markets and increasing demand from domestic corporates to fund projects, IL&FS Group and IFIN were keen to raise liquidity from foreign markets. Through the ECB framework, AfrAsia Bank aims to provide Indian Corporates with a unique platform, combining the expertise it has on Asian markets with the option to raise offshore INR funding whereby the clients can optimise liability, minimise costs and eliminate currency risk by blending their loan portfolio. This presents a new pool of opportunities to explore going forward”, said Parikshat Tulsidas, Senior Executive Treasury and Markets at AfrAsia Bank.

Ramesh C. Bawa, Managing Director & CEO, IL&FS Financial Services Limited affirmed: “IL&FS Financial Services Limited (IFIN) is pleased to have been associated with AfrAsia Bank for a pioneering Masala Loan transaction and we look forward to strengthen this relationship with AfrAsia Bank for many more opportunities, not only for IFIN, but for IL&FS Group and our client constituents, in the future”.

One of India’s leading infrastructure development and finance conglomerates, Infrastructure Leasing & Financial Services Limited (IL&FS Group) is the first Indian Non-Banking Financial Company in India to have signed such a financial deal.