RBI seeks comments/feedback on Draft Framework on Issuance of Rupee linked Bonds Overseas
The Reserve Bank of India has today placed on its website for comments/feedback, the draft framework on issuance of Rupee linked bonds overseas. Comments/ feedback may be e-mailed or sent by post to the Principal Chief General Manager, Foreign Exchange Department, Reserve Bank of India, Central Office, 11th Floor, Shahid Bhagat Singh Marg, Mumbai 400 001 on or before June 15, 2015.
A few international financial institutions were permitted to issue Rupee linked bonds in overseas markets, subject to certain conditions. In view of the interest shown by international investors for these bonds, the Reserve Bank on April 07, 2015 announced in its first Bi-monthly Monetary Policy Statement, 2015-16 its intention to expand the scope of issuance of these bonds by the international financial institutions as also to permit Indian corporates, eligible to raise external commercial borrowings (ECB), issue such bonds with an appropriate regulatory framework. Accordingly, the Reserve Bank has released the draft framework for issuance on issuance of Rupee linked Bonds overseas.
Principal Chief General Manager
Press Release: 2014-2015/2603- Date : Jun 09, 2015
Draft Framework on Issuance of Rupee linked Bonds Overseas
Issuance of Rupee linked bonds overseas
Attention of members of public is invited to paragraph 31 of the first Bi-monthly Monetary Policy Statement, 2015-16 announced by the Reserve Bank on April 07, 2015 proposing to expand the scope of issuance of Rupee linked bond overseas by the international financial institutions as also permit Indian corporates, eligible to raise external commercial borrowings (ECB), issue such bonds with an appropriate regulatory framework.
2. Accordingly, the following framework is proposed to be put in place for issuance of Rupee linked bonds overseas.
A. Indian Corporates:
B. International Financial Institutions:
International Financial Institutions of which India is a shareholding member intending to deploy the entire proceeds of the issuance in India shall not require prior permission for the issuance of Rupee bonds overseas irrespective of amount of issuance. In other cases, where an International Financial Institution (of which India is a member) wishes to retain the freedom to deploy the issue proceeds in any member country shall require prior permission from the Reserve Bank / Government of India.
Any investor in these bonds will be eligible to hedge both the foreign currency risk as well as credit risk through permitted derivative products in the domestic market. The investor can also access the domestic market through branches of Indian banks abroad or branches of foreign bank with Indian presence. Such hedging contracted with banks abroad on a back to back basis with AD category-I banks in India will be as per the procedure outlined in A. P. (DIR series) Circular No. 103 dated May 21, 2015.
3. Banks incorporated in India will not have access to these bonds in any manner whatsoever.