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Friday, June 26, 2015

RBI permits banks to borrow from global institutions

With a view to providing greater flexibility in seeking access to overseas funds, the RBI on Thursday permitted banks, which are authorised to deal in foreign exchange, to borrow from international /multilateral financial institutions without approaching it for case-by-case approval.

These international/ multilateral financial bodies will include institutions of which the Government of India is a shareholding member, institutions that have been established by more than one government, or those that have shareholding by more than one government and other international organisations.
For general banking

Such borrowings, according to a Reserve Bank of India notification, should be for the purpose of general banking business and not for capital augmentation.

According to extant regulations, Authorised Dealer (AD) category of international banks can borrow funds from their Head Office, overseas branches, correspondents outside India, or any other entity as permitted by the RBI, up to a limit of 100 per cent of their unimpaired Tier-I capital as at the close of the previous quarter or $10 million (or its equivalent), whichever is higher.

Source : Thehindubusinessline


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