Norms for using overseas money raised via tax-free rupee bonds eased

Under new rules the money can be used for relending to infra projects, says RBI

The Reserve Bank of India (RBI) has permitted Indian companies to use money, raised by issuing tax-free non-convertible bonds to overseas investors, in infrastructure projects.

The resident entities and companies, allowed by the government to issue tax-free, secured, redeemable, non-convertible bonds in rupees to person resident outside India can use such borrowed funds for lending or re-lending, said RBI.

The central bank said this money could be parked in deposits with banks in India pending utilisation by them for permissible end-uses.

Earlier, RBI had imposed restrictions on usage of funds by person resident in India borrowed in rupees from a person resident outside India. They could not use such borrowed funds for any investment in any company or partnership firm or proprietorship concern or any entity, or for re-lending.