Mumbai Sep 19 (IANS) The Reserve Bank of India (RBI) on Thursday liberalised some aspects of the external commercial borrowings (ECBs) policy including those related to rupee-denominated bonds to help check rupee depreciation.
"It has been decided to allow eligible ECB borrowers who are into manufacturing sector to raise ECB up to $50 million or its equivalent with minimum average maturity period of 1 year " the RBI said in a notification.
Till date ECB up to $50 million or its equivalent could be raised by eligible borrowers with minimum average maturity period of three years.
The decision to revise the minimum average maturity period of three years to one year was part of the five measures announced by the government last week after Prime Minister Narendra Modi held an economic review meeting.
Presently Indian banks can act as arranger and underwriter for rupee denominated bonds (RDBs) also called masala bonds issued overseas and their holding cannot be more than five per cent of the issue size after six months of issue as an underwriter.
"It has now been decided to permit Indian banks to participate as arrangers/underwriters/market makers/traders in RDBs issued overseas subject to applicable prudential norms " the central bank said.
Last Monday the government exempted tax on interest payable by Indian companies to non-residents including foreign companies on borrowings through off-shore rupee denominated bonds issued till March 31 2019.
Till now interest payable on such bonds issued before July 1 2020 was liable for concessional rate of tax of five per cent.
These steps which are aimed at raising the foreign exchange inflow are part of the multi-pronged strategy to curb current account deficit (CAD) and rupee depreciation.
Last Friday after the Prime Minister held the economic review meet Finance Minister Arun Jaitley announced the government s five measures and also a broad policy decision to curb non-essential imports and increase exports.

--IANS mgu/qd/vm