Eyeing expansion, Reliance gets RBI's special approval to raise funds

Reliance Industries Limited (RIL) has received the Reserve Bank of India (RBI)'s approval to retain $2 billion over and above the $3 billion loan it had raised during the last financial year, The Economic Times (ET) reported.

RIL had to seek RBI's permission since the amount it wanted to collect was more than the limit set by the central bank, the report said citing people aware of the developments. The money is likely to be used to support the working capital needs of the company besides expansion in energy and telecom businesses.

One of the people cited above told ET that Reliance has a strong credit rating and cash flows and for this reason, banks across the globe wanted to lend money to the company. Notably, this is not the first time that the central bank has extended the limit of loans. In fact, Reliance has received a similar approval before, ET reported.

Elaborating on the special approval for the country's biggest company in terms of market value, the newspaper quoted a person in the know as saying that such permissions are granted on a case-by-case basis and the company in question is required to make a sound argument to raise large amounts as in this case.

According to RBI's external commercial borrowing (ECBs) rules, individual loan exposure is capped at $750 million per fiscal year. To borrow beyond this limit, special permission is needed from the central bank to raise money abroad.

The loan is a five-year ECB and is the largest which involved global banks from countries like the UK, the US, India, Taiwan, and South Korea, among others, the ET report said.