Norms Changed: Overseas money can be raised through tax- free rupee bonds route
With the Reserve Bank of India (RBI) altering the pre-existing norms regarding raising funds through tax free, secured, redeemable, non- convertible rupee bond route, the liquidity position for the Indian companies is only bound to improve further.
Unlike before, when the RBI didn’t permit imposing restrictions on the Indian companies to use funds raised by issuing tax free non convertible bonds to overseas investors, the funds raised in the similar fashion can now be used by resident Indians for lending or re- lending, as per the RBI.
The Central Bank has permitted the Indian firms to use such borrowed funds in infrastructure projects to begin with.
Such kind of borrowed funds couldn’t be used by person resident in India (entities or companies) for any investment in any company/ partnership firm or any other previously. As per bank guidelines, the borrowed money can be placed in deposits in banks in India for making its use.