Only banks with 12% capital adequacy can borrow higher from overseas: RBI

The Reserve Bank of India (RBI) today said banks which have acapital adequacy ratio of at least 12% can avail the higher overseasborrowing facility. Last week, the banking regulator had announced that the current overseas borrowing limit of banks has been raised from 50% of unimpaired Tier I capital to 100%.

Moreover, banks were given the option to swap such borrowing with RBI at a concessional rate of 100 bps below the ongoing swap rate prevailing in the market. Banks can have the additional headroom for borrowing if the borrowing is for at least three years.  Today, RBI clarified that the concessional swap facility will be available for all fresh borrowing with a minimum tenor of one year and a maximum tenor of three years, irrespective of whether such borrowings are in excess of 50% of their unimpaired Tier I capital or not.

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