Corporates given additional 9 months to pre-pay foreign loans
Mumbai: The Reserve Bank on Tuesday extended the scheme for corporates to get rid of their overseas loans by pre-paying them as weak rupee increases their debt obligation.
"...It has been decided that the existing scheme of buyback or prepayment of foreign currency convertible bonds (FCCBs) under the approval route which expired on March 31, 2013 may be continued till December 31, 2013 and shall stand discontinued thereafter," RBI said in a notification.
The decision has been taken considering the developments in the global financial markets and declining rupee against dollar.
The rupee touched an all-time low of 59.98 to a dollar last week following Bernanke's statement that the US government could slowdown purchase of bonds, depending on economic condition, later this year. Today rupee closed at 59.66.
Many companies had issued these foreign currency convertible bonds (FCCBs) between 2006 and 2008 (and mostly in 2007), before the Lehman fall when the stock prices where at record high, and the rupee was trading at 48 to the dollar.
Most of these bonds are denominated in the US dollar and hence the mounting worries.
The report said the recent rupee fall has added to the woes. Most of the FCCBs that mature in 2012 were issued in 2007-08, when the rupee was at about 42 to a dollar.