"The government and RBI have been in discussions (on this matter) for the past few weeks and the guidelines can be expected very soon," a RBI source said.
FCEBs are financial instruments similar to Foreign Currency Convertible Bonds (FCCBs) in nature and allow corporates to raise money from overseas markets by issuing bonds.
Unlike FCCBs, where bonds can be converted into equity shares of the issuing company, in the case of FCEBs, the bonds can be converted into shares of a group company of the issuer.
Indian corporates looking at raising capital abroad will get one more tool of doing so. Presently, they have the options of External Commercial Borrowings (ECBs) and FCCBs. The government had notified the scheme in February this year.
According to the government's notification, any Indian company which is not eligible to raise funds from the domestic security market shall not be eligible to issue FCEBs.
Besides, the rate of interest payable on FCEB bonds and the issue expenses incurred in foreign currency shall be within the cost ceiling as specified by RBI under the External Commercial Borrowings policy.
While funds raised through FCEBs cannot be invested in capital markets and real estates in the domestic market, corporates will be able to use the funds for their operations overseas.
