The Reserve Bank of India (RBI) has withdrawn the facility of short-term foreign currency borrowings provided to non-banking financial companies (NBFCs) and housing finance companies (HFCs) as the economy is on rebound and liquidity in the system is improving.
"The decision has been taken after a review of the prevailing macroeconomic conditions and improvements in the domestic credit and liquidity conditions," the RBI said in a release here today. The RBI decision is with immediate effective.
After sources of funds dried up due to global financial meltdown, the Reserve Bank had allowed NBFCs and HFCs in 2008 to raise short-term foreign currency borrowings not exceeding 50 per cent of the net owned funds (NOFs) or $10 million, whichever was higher.
The facility was provided for refinancing their short-term liabilities.
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