RBI eases overseas borrowing norms for dollar-hungry OMCs

The Reserve Bank India (RBI) on Wednesday relaxed overseas borrowing norms for state-run Oil Marketing Companies (OMCs) as rupee continues to slide to new lows for more than a month now.

The RBI relaxed the norm that requires raising External Commercial Borrowings (ECBs) for working capital purposes from direct and indirect equity holders or from a group company with a minimum average maturity of five years.

Public sector OMCs, which require huge amount of foreign currency to import crude oil, can now raise ECBs for working capital purposes with a minimum average maturity of three to five years from all lenders under the automatic route.

"It has been decided, in consultation with the government of India, to liberalise the said provision and permit public sector OMCs to raise ECB for working capital purposes with minimum average maturity period of 3/5 years from all recognized lenders under the automatic route," the RBI said in a notification.

Further, the individual limit of $750 million or equivalent and mandatory hedging requirements as per the ECB framework have also been waived and the overall ceiling for such ECBs has been kept at $10 billion equivalent, with immediate effect.

While the OMCs have been encouraged to raise some of their dollar requirements from abroad, the central bank has asked the OMCs to have a Board-approved forex mark to market procedure and prudent risk management policy for such ECBs.

The notification comes on a day when rupee touched a fresh low and closed at its all-time low of Rs 73.34 per US dollar after Brent crude oil price went over $84 a barrel.

--IANS

mgu/nir