RBI issued Draft Framework on Issuance of Rupee linked Bonds Overseas

It is intended to permit Indian corporate and International Financial Institutions to issue rupee-linked bonds overseas.

Created On: Jun 10, 2015 13:03 ISTModified On: Jun 10, 2015 15:49 IST

The Reserve Bank of India (RBI) on 9 June 2015 issued Draft Framework on Issuance of Rupee linked Bonds Overseas.

It is intended to permit Indian corporate and International Financial Institutions (IFIs) to issue rupee-linked bonds overseas.

Key Features

Indian corporates eligible to raise external commercial borrowings (ECBs) are permitted to issue Rupee linked bonds overseas.
• The corporates which, at present, are permitted to access ECB under the approval route will require prior permission of the RBI to issue such bonds and those coming under the automatic route can do so without prior permission.
• The bonds may be floated in any jurisdiction that is Financial Action Task Force (FATF) compliant.
• The subscription, coupon payments and redemption may be settled in foreign currency. The proceeds of the bonds can be parked as per the extant provisions on parking of ECB proceeds.
• Banks incorporated in India will not have access to these bonds in any manner whatsoever.

International Financial Institutions, of which India is a shareholding member intending to deploy the entire proceeds of the issuance in India, would not be requiring any  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 would require prior permission from the Reserve Bank / Union Government.
• For dollar-Indian rupee conversion, the Reserve Bank's reference rate on date of issue would be applicable.

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