‘$79-billion ECBs unhedged’

RBI Governor Shaktikanta Das said a predominant part of the outstanding external commercial borrowings (ECBs) is effectively hedged. Of the outstanding ECBs of $180 billion, 44 per cent or $79 billion is unhedged. This includes about $40 billion liabilities of public sector companies, mainly in the petroleum, railways and power sectors, which have assets with a natural hedge character.

Besides, being public sector entities, their foreign exchange risk, if any, can be absorbed by the government. “Such a contingency is unlikely to arise. The remaining $39 billion ECB represents 22% of ECBs outstanding. Even this includes borrowings of those firms which have a natural hedge … This would leave a very small portion of the total outstanding ECBs that are truly unhedged,” he said.