RBI ups ECB limit to $10 bn, allows FIIs to invest up to $20 bn in G-Secs

The Reserve Bank of India has allowed Indian companies in the manufacturing and infrastructure sectors to borrow up to $10 billion overseas, in a bid to increase foreign fund inflows and cool rising dollar value against the rupee.

This would, however, be limited to companied that earn foreign exchange.

Simultaneously, the central bank also allowed foreign financial institutions (FIIs) registered with the Securities and Exchange Board of India (SEBI) to invest up to $20 billion in government of India securities.

RBI said both the decision have been made in consultation with the government.

Finance minister Pranab Mukherjee had, on Saturday, hinted at certain measures to stabilise market in consultation with the RBI.

''It has been decided to allow Indian companies in the  manufacturing and infrastructure sectors and having foreign exchange earnings 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,'' RBI said in a release.