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International banks are subscribing in a big way to syndicated loans originating from India for establishing corporate clientele in India. ECB offers an indirect way for many foreign banks to establish a corporate client base in India without actually having an operating base in India. This has led to a drop in costs of external commercial borrowings (ECBs).

A $200 million syndicated loan by Indian Oil Corporation in August 2005, for a residual maturity of 13 months is proposed to be priced as finely as 25 basis points over Libor. IOC has given the mandate to ING Vysya, Citibank and Standard Chartered.

Corporation Bank is planning to raise $50 million for one year at 27 basis points over Libor. Reliance Industries’ (RIL) plan to refinance $348 million loan for a residual period of three years at 55-60 basis points over Libor.

IOC had set a benchmark for triple AAA corporates last year by raising five-year funds at 65 basis points over Libor. Few years back, foreign banks used to subscribe to loans from India at 150-200 basis points spread over Libor.

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