The Reserve Bank of India (RBI) Wednesday relaxed policy on borrowing from overseas to allow state-owned fuel retailers to raise up to USD 10 billion external debt for working capital needs.
Till now oil marketing companies were not allowed to raise external commercial borrowing (ECB) for working capital needs on a long-term basis. They could raise a maximum of one-year overseas loan by way of buyers credit, repay it within 12 months and raise it again thereafter. Now, the RBI has allowed them to raise ECB of minimum maturity of 3 or 5 years.
The move comes at a time when international oil prices have hit four-year high of near USD 85 per barrel and the rupee plummeted to close at an all-time low of Rs 73.34 to a US dollar. Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) will be allowed to raise overseas funds with a minimum average maturity period of 3 or 5 years under the automatic route. Read more
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