RBI allows firms to raise $750 mn via rupee bonds

The regulator has also allowed REITs and Infrastructure Investment Trusts to raise funds under this route

The Reserve Bank of India (RBI) has allowed companies to raise up to $750 million from overseas markets under the automatic route, through rupee-denominated bonds. “Cases beyond this limit will require prior approval of the Reserve Bank,” the central bank said on Tuesday.

The banking regulator has also allowed Real Estate Investment Trusts and Infrastructure Investment Trusts to raise funds under this route.

According to RBI, the proceeds can be used for all purposes except for equity investment domestically, real estate activities other than for development of integrated township or affordable housing projects.

RBI said foreign investors could hedge their exposure in rupee through permitted derivative products with banks in India. “The investors can also access the domestic market through branches / subsidiaries of Indian banks abroad or branches of foreign bank with Indian presence on a back-to-back basis.”
 
The minimum maturity period of these bonds will be five years. “The call and put option, if any, shall not be exercisable prior to completion of minimum maturity,” said RBI.