The Reserve Bank of India has initiated several steps to streamline the process of raising funds from foreign markets for Public Sector Undertakings (PSUs) and banks. These steps have been taken to enhance foreign currency inflows, investment activity, and liquidity in the system, in light of the evolving global economic landscape. In the new setup, RBI has eased the norms of External Commercial Borrowing for eligible PSUs. Additionally, the bank has granted regulatory relief to banks regarding Foreign Currency Non-Resident Bank Deposits to enhance foreign currency inflows.
RBI has taken these steps concurrently with the recent monetary policy assessment to increase the flexibility of funding for public sector undertakings that are implementing mega projects. According to industry experts, the relaxation will mitigate financial restrictions and enable PSUs to borrow funds from international markets at reasonable interest rates. The RBI also clarified that the relaxation will remain in effect only for a defined period, giving institutions time to raise capital from international markets.Â
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The analysts pointed out that such moves have been adopted before in situations of global economic uncertainty. The move is taking place at a time when India is emphasising the importance of infrastructure development and the growth of its industrial base for economic development. It may help achieve their objective and strengthen their financial sector. Economists predict that such measures will improve investor confidence and attract more foreign funds into the country.
