Saturday, August 13, 2011

RBI : COMPANIES CAN ISSUE FRESH FCCBs TO RETIRE OLD DEBT

To facilitate the redemption of existing Foreign Currency Convertible Bonds (FCCBs), the Reserve Bank of India (RBI) has allowed Indian companies to take fresh external loans and issue new FCCBs to address debt obligations. Reserve Bank of India (RBI) would consider applications to refinance FCCBs under the automatic route. Funds raised through fresh extra commercial borrowings (ECBs) and FCCBs cannot exceed the maturity redemption value of outstanding FCCBs. RBI has given Indian companies additional time till March 2012 to buy back FCCBs at reduced discount rates.
The restructuring of FCCBs, involving a change in the existing conversion price, is not permissible. However, companies can use the approval route to put up restructuring proposals which do not involve a change in the conversion price. RBI would consider such proposals on their merit.

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