The RBI has eased norms for raising funds through external commercial borrowing in a move seen to arrest the sharp fall in the rupee. The decision is in line with the government’s announcement last week to address the widening the current account deficit.
As per the new norms, manufacturing firms can raise ECB upto $50 million with a minimum average maturity period of one year, as compared to three years earlier. Further, earlier banks were allowed to underwrite rupee denominated bonds issued overseas for not more than 5% of the issue size after 6 months of the issue. Now that limit has been removed though prudential norms will apply.