India’s largest natural gas importer, Petronet LNG Ltd., is seeking a loan of at least Rs 120 billion (USD 1.4 billion) to help fund the construction of a new petrochemical plant and an LNG terminal, according to people familiar with the development.

Major domestic lenders including Axis Bank, State Bank of India (SBI), and Union Bank of India are reportedly considering participating in the facility, which would mark one of Petronet’s largest fundraising exercises to date. The company has appointed SBI Capital Markets as the adviser for the transaction and is inviting bids from banks either individually or in syndicates, the sources said, requesting anonymity due to the private nature of the talks.

The loan is being sought at a time when India’s loan market is relatively subdued, with overall bank lending growing 9.5 per cent as of 27 June—its slowest pace since March 2022, according to Reserve Bank of India data. Should the deal proceed, it could become one of the largest local currency loan agreements in India this year, based on Bloomberg-compiled figures.

Proceeds from the facility will partially fund the development of a major petrochemical complex in Dahej, located on the southwest coast of Gujarat, which aims to help diversify Petronet’s earnings beyond the liquefied natural gas sector. The project is estimated to cost Rs 206.85 billion, according to the company’s website.

In addition, the New Delhi-headquartered firm is developing a separate five-million-tonne land-based LNG import terminal at Gopalpur on Odisha’s east coast.

The loan may have a tenor of more than 10 years, and its pricing is expected to be below SBI’s current one-month marginal cost of funds-based lending rate of 7.95 per cent, two sources added.

Spokespersons for Petronet, SBI, Axis Bank, Union Bank of India, and SBI Capital Markets have yet to respond to Bloomberg News’ requests for comment.