The Reserve Bank of India (RBI) on Tuesday said that Indian corporates, eligible to raise external commercial borrowings (ECBs), are permitted to issue rupee- linked bonds overseas.
“Corporates which are, at present, permitted to access ECB, under the approval route, will require prior permission of the RBI to issue such bonds and those coming under the automatic route can do so without prior permission of the RBI,” the apex bank said.
In the first bi-monthly monetary policy, the RBI had proposed to expand the scope of issuance of rupee-linked bond overseas by the international financial institutions as also permit Indian corporates, eligible to raise ECBs.
The RBI proposed that the subscription, coupon payments and redemption might be settled in foreign currency. “The proceeds of the bonds can be parked as per the extant provisions on parking of ECB proceeds. Further, the end use restrictions will also be as applicable under the existing ECB guidelines.”
The RBI said that amount and average maturity period of such bonds should be as per the existing ECB guidelines. “The call and put option, if any, will not be exercisable prior to completion of applicable minimum average maturity period.”
It also stipulated the coupon on the bonds should not be more than 500 basis points above the sovereign yield of the Government of India security of corresponding maturity as per the FIMMDA yield curve prevailing on the date of issue.
For dollar-Indian rupee conversion, the Reserve Bank's reference rate on date of issue would be applicable.
International Financial Institutions, of which India is a shareholding member intending to deploy the entire proceeds of the issuance in India, would not be requiring any prior permission for the issuance of rupee bonds overseas irrespective of amount of issuance.
In other cases, where an International Financial Institution (of which India is a member) wishes to retain the freedom to deploy the issue proceeds in any member country would require prior permission from the Reserve Bank / Government of India.
