RBI Grants RIL Permission to Retain $2B Surplus from Lenders

Reliance introduces swappable, multipurpose EV batteries for clean energy

RBI Grants RIL Permission to Retain $2B Surplus from Lenders, Reports Say

According to a report from The Economic Times (ET), the Reserve Bank of India (RBI) has authorized Reliance Industries (RIL) to retain an additional $2 billion on top of the $3 billion it raised during the 2022-23 fiscal year (FY23). Sources cited in the report reveal that Reliance intends to utilize the surplus funds for working capital requirements and to fuel the growth of its new energy and telecom ventures.

ET quoted an insider saying, “Given Reliance’s robust credit rating and cash flows, global banks expressed interest in participating in the loan exercise earlier in March. The strong demand for the loan during two rounds of syndication resulted in excess funds being available for offer. Consequently, the company chose to retain more than required. This is not the first instance where RBI has granted such permission, as Reliance has sought special approval from the RBI previously.”

Previous media reports had indicated that Reliance Industries was considering obtaining a foreign-currency loan of up to $2 billion.

Bloomberg reported that RIL is currently in discussions with lenders regarding a foreign-currency loan worth $2 billion, which will support the ongoing expansion of its oil-to-telecom business. The conglomerate led by Mukesh Ambani plans to secure the loan through India’s dedicated external commercial borrowing route. The loan is expected to have a maturity period ranging between three to five years, with the proceeds earmarked for capital expenditure and refinancing another loan due in September. Notable lenders involved in the discussions include Bank of America Corp., Citigroup Inc., and Standard Chartered Plc, as stated in the report.

Brokerage firms have expressed optimism about RIL’s stock, with JM Financial issuing a ‘buy’ rating for Reliance Industries and a target price of ₹2,900. The brokerage downplayed concerns regarding debt and highlighted that Reliance Industries’ share prices were near their worst-case value. Key discussions with investors revolved around identifying potential triggers that could substantially impact the stock’s revaluation.

On December 1, 2022, Reliance shares reached a 52-week high of ₹2,754.70 on the BSE. As of June 20 closing, the stock has experienced a seven percent decline from its one-year peak.

About Reliance:

Reliance Industries Limited, headquartered in Mumbai, is an Indian multinational conglomerate. Its diverse portfolio encompasses energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles.

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