Ambani-led Reliance Industries Ltd has obtained a nod from the Reserve Bank of India to retain $2 billion, over and above the $3 billion it raised last financial year. The permission was granted in order for the company to expand operations.
RIL had sought approval from the Central bank as the amount composed was over the limits mandated by Mint Road. As per the Economic Times report, Reliance Industries intends to utilize the money to fund working capital needs in addition to expanding its new energy and telecom businesses.
The source quoted in the report stated that as a result of Reliance’s strong credit rating and cash flow, “banks across the globe wanted to participate in the loan exercise back in March.” Following this the source added that post two rounds of syndication, there was still money available that banks were willing to offer due to the loan’s high demand. Hence, the company decided to hold back more than required. This is not the first time the RBI has authorized a similar increase. It was not the first time for the company to seek special permission from RBI. The central has granted special permission to Reliance before as well.
Another source cited in the report said, “RIL had approached the RBI to retain the $2 billion over and above the $3 billion it had sought to raise last fiscal. These approvals are granted on a case-by-case basis as the company has to make a sound business case to raise this kind of money.” The official further added that the company attained approval earlier this month and it will withdraw the additional funds later this month.
For the unversed, as per the Reserve Bank of India’s rules on External Commercial Borrowings (ECO), a company is allowed to avail up to $75 million per fiscal year. In order to go beyond this limit, organizations need to seek special permission to raise money abroad.
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