With an increasing list of companies in the fray for foreign acquisitions, the Reserve Bank of India is learnt to have indicated to banks that they can exceed the limits set for financing overseas acquisitions on a case to case basis and with its approval. |
According to banks, the RBI has indicated that depending upon the viability of the project, the relaxation could be considered. |
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The move comes at a time when Oil and Natural Gas Corporation (, National Thermal Power Corporation (NTPC), Bharat Heavy Electrical Ltd (Bhel) and Bharat Rare Earth Movers are getting ready for overseas projects and acquisition. |
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ONGC is planning a exploration in North Sea and acquisition in Russia, NTPC will be setting up three power plants in Sri Lanka. Similarly, BHEL is moving ahead for a project in Sudan followed by Bharat Earth Movers in the process of finalising a project in one of the neighbouring countries. |
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Besides, various airlines have started discussions with the banks for financing of the aircraft acquisition. Indian Airlines, Air-India and Jet have broached discussions with State Bank of India and a group of foreign banks for finalising the long-term finance of $50 billion over a period of 10 years. |
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The foreign banks include Citibank, Standard Chartered Bank, BNP Paribas and Societe Generale among others. |
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The new breed of airlines "" Kingfisher, Air Deccan and SpiceJet are also in talks with banks for financing of their fleet acquisition overseas. |
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Last week, the RBI allowed banks to fund the overseas acquisitions of Indian corporate. However it mentioned that board of individual bank has to lay down the limits for funding of overseas corporation depending on their overall corporate limits. But sources said, going by the increasing demand, the RBI is willing to make the limits flexible. |
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Bankers said the feasibility of the project and the soundness of the banks will be driving criteria for relaxing the limits. |
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