Mumbai, Sept 30 (KNN) The MSME sector is optimistic that the Reserve Bank of India’s move to allow India Inc to issue rupee-denominated bonds overseas with a maturity of 5 years without any end-use restrictions will liberalize the foreign currency borrowing by the small and medium enterprises.
 
RBI, on Tuesday, notified the new external commercial borrowing (ECB) and overseas rupee debt norms which provides room for even REITs and Infrastructure Investment Trusts to raise funds. 

An MSME consultant on Finance opined that the move will liberalize foreign currency borrowing by small and medium enterprises.
“It will also minimize the exchange risks involved in ECBs,” he added.

According to the RBI notification, the bonds should have a minimum maturity of five years, and issuers can raise up to USD 750 million under automatic approval. 

"Any corporate or body corporate is eligible to issue Rupee denominated bonds overseas," RBI said in a notification.
 
"Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) coming under the regulatory jurisdiction of the Securities and Exchange Board of India are also eligible," the notification added.
 
The proceeds can be used for all purposes except real estate activities other than for development of affordable housing projects, investing in capital market and using the proceeds for equity investment domestically, purchase of land and activities prohibited as per the foreign direct investment (FDI) guidelines. 

The foreign currency - rupee conversion will be at the market rate on the date of settlement for the purpose of transactions undertaken for issue and servicing of the bonds. (KNN Bureau)