RBI proposes to ease foreign borrowing rules for firms

India's central bank on Friday proposed linking corporate foreign borrowing limits to financial strength and scrapping cost caps on most such debt in a push to improve funding flows under wider measures unveiled this week by Governor Sanjay Malhotra.

The RBI's proposal allows firms to raise up to $1 billion or 300% of net worth, whichever is higher. This replaces the earlier $1.5 billion cap under the automatic route, which needed specific approval for larger sums.

The central bank also suggested scrapping cost caps, permitting external commercial borrowings at market-determined interest rates, instead of the previous ceiling of a global benchmark, plus 500–550 basis points.

For borrowings of less than three year maturity, costs will be capped in line with those applicable for trade cre