RBI relaxes norms for overseas fund raising

Mumbai, September 19

The RBI on Wednesday eased norms for companies in the manufacturing sector to raise overseas funds and allowed Indian banks to market Masala Bonds in line with the government’s measures to prop up the rupee and curb the widening current account deficit.

Liberalisation of the External Commercial Borrowing (ECB) norms was among other measures announced by the government. “It has been decided, in consultation with the government, to liberalise some aspects of the ECB policy, including policy on rupee-denominated bonds (Masala Bonds) ...,” the RBI said.

As per the revised policy, eligible ECB borrowers who are into the manufacturing sector will be allowed to raise ECB up to $50 million or its equivalent with the minimum average maturity period of 1 year.

The RBI has also made changes in norms wherein Indian banks can market Masala Bonds overseas.

Presently, Indian banks can act only as arranger/ underwriter for such bonds and in case of underwriting an issue, their holding cannot be more than 5 per cent of the issue size after 6 months of issue. Now, the banks can “participate as arrangers/ underwriters/ market makers/ traders in RDBs issued overseas subject to applicable prudential norms,” the RBI said. — PTI