PFC First NBFC to Issue Global Bonds Under New RBI Swap Facility

New Delhi:  Power Finance Corporation Limited (PFC) has successfully raised fresh capital in the international bond market. With this milestone, PFC has officially become the first Central Public Sector Undertaking (CPSU) and the first Non-Banking Financial Company (NBFC) in India to secure global funding by using the new foreign exchange swap facility recently announced by the Reserve Bank of India (RBI) in its Monetary Policy Statement.

This achievement sets a new benchmark for how state-backed Indian financial companies can access global funds at optimized costs.

What is the RBI Swap Facility and Why Does It Matter?

When Indian companies borrow money from overseas markets in foreign currencies like US Dollars, they face a big risk: if the value of the Indian Rupee drops, their repayment costs can skyrocket. To prevent this, companies must buy expensive protection, known as hedging.

To solve this challenge, the RBI recently introduced a specialized US Dollar-Rupee Forex Swap Facility. Here is how it helped PFC:

• Lower Costs: The RBI facility gives eligible public companies a secure way to swap their foreign borrowings into Indian Rupees at a stable, concessional rate.

• Risk Protection: This protection shields companies from unexpected currency market swings, making international borrowing much safer and more affordable.

Strategic Benefits for PFC and India's Power Sector

By moving quickly to use this new RBI framework, PFC has unlocked several key operational advantages:

• Cheaper Global Capital: PFC secured international funding at competitive interest rates without having to pay heavy premiums for private currency insurance.

• Funding Infrastructure: The money raised from these global investors will be used to fund massive power, green energy, and infrastructure projects across India.

• A Model for Other Companies: As the pioneer of this mechanism, PFC has created a clear financial roadmap for other government-owned companies and financial institutions looking to pull in international capital.