RBI restricts use of ECB to repay rupee loans

KOLKATA: The Indian banking regulator has barred local companies from repaying rupee loans using dollar loans raised overseas.

In a note issued Friday, Reserve Bank of India said companies will not be allowed to raise external commercial borrowings from overseas branches and subsidiaries of Indian banks for the purpose of refinance and repayment of rupee loans in case of take-out financing, infrastructure financing and spectrum allocation and other repayments.

Earlier, RBI restricted banks from issuing guarantees to offshore joint ventures and subsidiaries of Indian companies to avail of foreign currency loans to repay rupee credit.