INSUBCONTINENT EXCLUSIVE:
Kolkata: The Reserve Bank of India has further eased overseas borrowing rules at a time when the local credit market is in the process of
normalisation from tight liquidity condition.
The central bank reduced the mandatory hedge coverage to 70% per cent from 100% for external
commercial borrowings (ECB) raised by Indian companies.
The step would also help attract dollar inflows as total outflows outweigh inflows
this year.
RBI has been easing norms for overseas borrowings in the past few weeks following the liquidity crunch which plagued the
non-banking finance companies
It has already reduced the minimum tenure for borrowing through the ECB route to three years from five years and the tenure required for
exemption from mandatory hedging to five years from 10 years
On Monday, RBI also said that ECBs raised earlier but fell within the said time period will be required to mandatorily roll-over their
existing hedge(s) only to the extent of 70% of outstanding exposure.
These moves are seen as steps to support the credit market's well as
resolve the differences that RBI had with the government on the liquidity issue.
