The Reserve Bank of India (RBI) has raised the limit for external commercial borrowings (ECBs) and government securities (G-Secs) in an
attempt to revive the Indian rupee and the economy.
The central bank said it has taken measures in consultation with the government to liberalise capital account transactions.
"It has been decided to allow Indian companies in the manufacturing and infrastructure sector and earning foreign exchange to avail of external commercial borrowing (ECB) for
repayment of outstanding rupee loans towards capital expenditure and/or fresh rupee capital expenditure under the approval route," the RBI said.
"The overall ceiling for such ECBs would be $10 billion," it added.
The existing limit for investment by Securities and Exchange Board of India (Sebi) registered foreign institutional investors (FIIs) in government securities has been enhanced by a further $5 billion. This would take the
overall limit for FII investment in G-Secs from $15 billion to $20 billion.
"In order to broad base the non-resident investor base for G-Secs, it has also been decided to allow long-term investors like Sovereign Wealth Funds (SWFs), multi-lateral agencies, endowment funds, insurance funds, pension funds and foreign central banks to be registered with Sebi, to also invest in G-Secs for the entire limit of $20 billion," the RBI said.
The sub-limit of $10 billion (existing $5 billion with residual maturity of 5 years and additional limit of $5 billion) would have the residual maturity of three years.
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