Floating rate of interest

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Raman (Querist)
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21 May 2012 Urgent !!!

My client has taken loan of 40 crores from Financial institution /NBFC on floating rate of interest. Therefore a minor increase in interest will cause major impact on the financials.

My question: i. Can the interest rate be hedged

ii. What are the ways of hedging it

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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21 May 2012 One of the ways to hedge is by entering into floating to fixed interest rate swap with the Bank.

Raman

Raman (Querist)
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21 May 2012 Dear Sanjay,

Thanks a lot for your prompt response. In India specifically, agencies those do it.Can u name a few ?

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Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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21 May 2012 Most of the banks have the treasury cell for hedging activities such as SBI, ICICI, HDFC, etc...

It needs credit limits, RBI submissions and many other complaince requirements.

You may talk to your corporate banker to get more information.