The Reserve Bank of India has allowed state-owned oil marketing companies to raise up to $10 billion (Rs 73,340 crore) from foreign markets to meet their working capital needs, Union Economic Affairs Secretary Subhash Chandra Garg said on Wednesday.
“Public Sector Oil Marketing Companies will raise $10 billion for three to five years for financing their permanent working capital,” Garg tweeted. “RBI has also granted the necessary exemptions under the external commercial borrowings policy.”
External commercial borrowings are loans made by non-residents to Indians. In a circular on Wednesday, the central bank said it had waived the limit of $750 million per individual under the external commercial borrowing framework. The minimum average maturity period of the loans oil marketing companies can take should be three to five years, the bank said. At present, the minimum period for such loans is five years.
The RBI said the order will come into effect from the date of the circular.
The central bank’s directive came on a day when the rupee slipped to a record low of 73.34 against the dollar, owing to rising crude oil prices in the international market. CNBC-TV18 quoted an unidentified oil company source as saying that RBI’s move will help them raise money more cheaply.