Indian NBFCs Raise $3.67 Billion in Overseas Syndicated Loans, more than Double 2024 Levels

Indian non-bank lenders (NBFCs) have raised $3.67 billion in overseas syndicated loans so far in 2025, more than double the $1.64 billion raised in 2024. The increased fundraising is attributed to cheaper pricing, a larger pool of interested banks, and favorable tax treatment on funds raised offshore. Despite a depreciating rupee, overseas banks are willing to commit loan funds to Indian companies, making the loan market accessible for even lower-rated NBFCs.

Indian non-bank lenders (NBFCs) have significantly increased their overseas syndicated loan borrowing, raising $3.67 billion so far in 2025, more than double the $1.64 billion raised in 2024 [1]. This surge is driven by cheaper pricing, a larger pool of interested banks, and favorable tax treatment on funds raised offshore. Despite a depreciating rupee, overseas banks remain willing to commit loan funds to Indian companies, making the loan market accessible for even lower-rated NBFCs.

The increased fundraising is attributed to several factors. Cheaper pricing, due to floating rate loans linked to the three-month SOFR (Secured Overnight Funding Rate), has made borrowing more attractive. The SOFR rate has eased about 100 basis points to around 4.35% from 5.35% a year ago [1]. Additionally, more overseas banks are willing to lend to Indian companies, reflecting a wider acceptability for local firms in the overseas bank market. Chetan Joshi, managing director and head of debt finance at HSBC, noted that better pricing and diversification of funding sources are key factors driving this trend [1].

The loan market is now accessible for even lower-rated NBFCs. According to LSEG Loan Connector data, about 78% or $2.85 billion of the $3.67 billion raised so far in 2025 has been by Indian NBFCs rated below AAA [1]. This willingness among overseas lenders to climb the risk gradient indicates a growing confidence in the Indian NBFC sector.

One notable example of this trend is Avanse Financial Services, which raised $200 million through a three-year loan led by HSBC and syndicated to eleven banks from countries such as Japan, Taiwan, Singapore, and the UAE. The loan was the company's first dual currency loan, with $59 million raised in yen [1]. Raising funds in currencies like yen helps companies reduce borrowing costs as they are priced at lower rates and also because some jurisdictions have an easier tax regime.

The increased fundraising comes amidst a backdrop of clean out trades in Indian markets. Since April 2025, clean out trades worth $2 billion have been executed, with strategic investors selling significant stakes in companies like Home First Finance, Eternal, Adani Wilmar, AB Fashion, and Paytm [2]. These large block deals have raised significant capital, indicating a robust pipeline for such deals in the coming months.

In the domestic market, Muthoot Finance reported a 65% year-on-year (YoY) rise in Q1FY26 PAT to Rs 1,974 crore, up 37% sequentially. The company also reported a record consolidated AUM of Rs 1,33,938 crore, marking a 37% YoY increase [3]. The company's gold loan AUM was Rs 1,13,194 crore as of March 31, 2025, with a 40% YoY increase. These strong financial results indicate a robust performance in the Indian NBFC sector.

References:
[1] https://economictimes.indiatimes.com/industry/banking/finance/nbfcs-tap-3-67-billion-in-overseas-syndicated-loans-more-than-double-2024-levels/articleshow/123351172.cms
[2] https://www.cnbctv18.com/market/india-market-2-billion-dollar-block-deals-strategic-investors-exit-19652201.htm
[3] https://economictimes.indiatimes.com/markets/stocks/news/muthoot-finance-shares-in-focus-on-posting-65-yoy-growth-in-q1-pat-record-loan-book/articleshow/123294543.cms?from=mdr