High-rated corporates shop for cheaper loans

With faster rate-cut transmission, more firms opt for such loans

- CHRISTINA TITUS & KSHIPRA PETKAR

HIGH-RATED CORPORATES — AA and above — are increasingly seeking loans linked to external benchmark-linked lending rates (EBLR), said bankers.

The shift, which has been happening over the past few months, is being largely driven by the desire to benefit from policy rate cuts and rising bond market yields.

“Corporates are demanding to shift to EBLR loans since there is an expectation that the Reserve Bank of India (RBI) might cut rates in December. This will lead to faster repricing as well,” Binod Kumar, MD & CEO, Indian Bank, said.

A senior official at a state-owned bank said strong corporates tend to negotiate harder with banks for EBLR loans since banks also want to retain them.

The trend has become stronger from the second quarter.