The Reserve Bank of India (RBI) on Wednesday liberalised the external commercial borrowings (ECB) rules for public sector oil marketing companies.

The RBI said in consultation with the Government of India that it has been decided to permit oil marketing companies to raise ECB for working capital purposes with minimum average maturity period of 3-5 years from all recognised lenders under the automatic route.
Further, the central bank has also waived the individual limit of $750 million or equivalent and mandatory hedging requirements as per the ECB framework for borrowings under this dispensation and capped the overall ceiling for such ECBs at $10 billion.

The Reserve Bank of India’s decision came in the backdrop of depreciating rupee and rising oil prices. The rupee recovered sharply from record low levels on Wednesday after reports that the government was in talks with the RBI for a special dollar swap window with some state-run fuel retailers. The rupee had ended at a record closing low of 73.34 per dollar on Wednesday on the back of rising crude oil prices, global trade war concerns and a fall in domestic equities.

There was a talk of the possibility of opening a special swap window for oil marketing companies, as was done when the rupee depreciated in 2013, but according to sources, the Reserve Bank of India was not keen on this as it would amount to a knee-jerk reaction by the central bank, the official added.