Foreign Currency Term Loan

Foreign Currency Term Loan

Foreign Currency Term Loan( popularly known as FCTL) is the replacement for Term Loan in INR. Foreign Currency Term Loans (FCTL) can be disbursed in four currencies viz. US$, Sterling, Euro and Japanese Yen with a maturity period of 6 months to 7 years. It can be repaid by bullet payment or in stipulated instalments or by conversion of rupee term loans, as per the terms of the original sanction.

Who Can availthis facility:

Exporters, Since they have a natural hedge.

Purpose of FCTL:

  • For working capital requirements in Indian Rupees
  • For the pre-shipment advances/ post shipment advances to the exporters
  • Import of raw materials
  • Import of capital goods
  • Purchase of indigenous machinery
  • Repayment of the existing Rupee Term Loan
  • Repayment of existing ECB's

Features of FCTL :

Term Loan in Foreign Currency for a tenor of 1 Year to 7 Years.

It is Financially Viable to the client(s) who are naturally hedged (ideally should have recurring / running business for Fx Inflows).

Thus, a regular Exporter can repay through Export receivables. This FCTL $ liability creates a natural hedge against a $ receivable asset.

Interest on FCTL in USD can be serviced through receivables in USD only.

Exports should be regular in nature and also part of those export receivables should be un-hedged so that the same can be used for repayment of FCTLs