The Reserve Bank of India (RBI) has further relaxed foreign borrowing norms for banks under the recently opened swap window, allowing them to raise funds through their head offices and correspondents.
Until now, the window was limited to the banks' overseas branches.
"Authorised dealer category-I banks may borrow funds in foreign currency from their head office, overseas branches and correspondents or any other entity as permitted by the Reserve Bank and avail of the this window to raise up to 100 per cent of their unimpaired tier I capital or $10 million whichever is higher," the central bank said in a notification, amending the regulations issued on September 26.
RBI said the move is aimed at providing greater flexibility to banks in accessing overseas funds.
So far, according to dealers, the banks have raised more than $1 billion through this window, including $255 million raised by YES Bank.
It can be noted that the RBI, in its attempt to
attract foreign fund inflows to arrest the free-fall of the rupee, had last month allowed banks to borrow in foreign currencies up to 100 per cent of their standard tier 1 capital with a special 100 basis points concessional rate of the prevailing swap rate.
RBI has also
allowed banks to attract money from NRIs through a special swap window under which the central bank would compensate them up to 3.5 per cent of their cost differential.
Last week, Governor Raghuram Rajan had said $5.6 billion have already arrived in the country through these mechanisms. Analysts were expecting $10 billion worth NRI funds through this window till November 30.
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