The Reserve Bank of India [RBI] on Monday has announced a series of steps which according to RBI will help to improve the national currency and the economy.
The measure explained by the RBI includes growing limits for external commercial borrowings as well as government securities.
In a statement issued by the RBI, state, “RBI has taken measures in consultation with the government to liberalise capital account transactions.”
It further includes, “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 overall ceiling for such ECBs would be $10 billion,” said RBI statement.
Moreover, the present limit for investment by Securities and Exchange Board of India (SEBI) reported foreign institutional investors (FIIs) in government securities (G-Secs) has been improved by an additional amount of $5 billion.
Reports have said that this would help to take the total limit for FIIs investment in G-Secs from present $15 billion to $20 billion.
The RBI statement added, “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), multilateral 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 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.
