OMCs must complete their $10 billion overseas borrowings in a year: FinMin

New Delhi: A day after relaxing overseas borrowing norms for oil companies, the government Thursday said state-owned fuel retailers will have to complete USD 10 billion external commercial borrowing (ECBs) within a year and they would not be required to hedge the exposure.

The Reserve Bank of India (RBI) on Wednesday relaxed policy on borrowing from overseas up to USD 10 billion external debt for working capital needs amid depreciating rupee.

"OMCs will borrow USD 10 billion with a maturity of 5 years in a phased manner, with an initial tranche of USD 4 billion followed by two tranches of USD 3 billion each, all borrowing completed in a period of one year from now," a Finance Ministry statement said.

Oil marketing companies will not be required to hedge their exposure, it said.

Till now OMCs were not allowed to raise ECB for working capital needs on a long-term basis. They could raise a maximum of one-year overseas loan by way of buyers credit, repay it within 12 months and raise it again thereafter.

The move comes at a time when international oil prices have touched four-year high of USD 86 per barrel and the rupee plummeted to a low of 73 to the dollar.

Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) will be allowed to raise overseas funds with a minimum average maturity period of 3 or 5 years under the automatic route.

The RBI also lifted the individual borrowing limit set at USD 750 million under the external commercial borrowing (ECB) framework.

With oil prices climbing to four-year high and the rupee plunging to new lows, imports have come costlier. Oil companies now need a higher working capacity to meet their monthly import requirements.

India is 81 per cent dependent on imports to meet its

oil needs.