RBI is also allowing manufacturing companies to raise up to $50 million from overseas lendersMumbai:The Reserve Bank of India relaxed offshore borrowing rules for companies and financial institutions on Wednesday, a move that is likely to boost rupee exchange rate.
Borrowers can now raise funds from offshore markets for at least three years without any ceiling on amount.
Previously, RBI had only allowed companies to borrow up to $50 million for three years.
For funds beyond $50 million companies had to borrow for at least five years.In addition, RBI is also allowing manufacturing companies to raise up to $50 million from overseas lenders for one year compared to previous minimum maturity rule of three years."This is a rupee-positive move and will also give lot of flexibility for companies to raise bonds overseas," said a debt investment banker at a foreign bank.The rupee has fallen by almost 2 per cent so far in 2019, most among its regional peers, continuing its bear run from last year.The RBI's new governor Shaktikanta Das, who was appointed by government in November after his predecessor Urjit Patel resigned abruptly, has relaxed some measures to support growth including a one-time dispensation scheme for small borrowers.The RBI under Mr Das could also agree to give an interim dividend to government to fund a wide fiscal deficit.He has also promised to maintain adequate liquidity to address any financial crunch in system.