Boon for foreign lenders as RBI bans banks from US$ loans

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By Rashmi Kumar
24 Apr 2014

The Reserve Bank of India has banned overseas branches and subsidiaries of Indian banks from providing US dollar funds to companies if the end use of the proceeds is to repay rupee loans. While the move is a victory for international lenders who will now have the upper hand in obtaining new business, it has also led to predictions of a decline in loan volumes from the country, writes Rashmi Kumar.

India’s central bank announced on April 22 that it will no longer permit infrastructure and manufacturing companies from seeking US dollar financing from the overseas units of Indian banks if the plan was to refinance their rupee debt — something that has been allowed since June 2012.

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