RBI allows state-owned oil companies to borrow long term working capital from overseas

New Delhi, October 4: The Reserve Bank of India (RBI) has allowed state-owned oil companies to borrow long term working capital from overseas. RBI relaxed the policy on borrowing up to 10 billion US dollar from the overseas by the state owned fuel retailers.

 

Till now oil marketing companies including Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd, were not allowed to raise external commercial borrowing (ECB) for working capital needs on a long-term basis. Now, the RBI has allowed them to raise ECB of minimum maturity of 3 or 5 years.

The move comes at a time when international oil prices have hit four-year high of near 85 US dollar per barrel and the rupee plummeted to close at an all-time low of 73 rupee and 34 paise to a US dollar.

Public sector oil marketing companies include Indian Oil Corporation, HPCL and BPCL.

"Public Sector Oil Marketing Companies will raise $10 billion for 3-5 year for financing their permanent working capital. RBI has also granted necessary exemptions under the ECB policy," Economic Affairs Secretary S C Garg said in a tweet.

"It has been decided, in consultation with the Government of India, to liberalise the said provision and permit public sector Oil Marketing Companies (OMCs) to raise ECB for working capital purposes with minimum average maturity period of 3/5 years from all recognized lenders under the automatic route," the circular said.