RBI Reduces Mandatory Hedging For Foreign Loans:- The Reserve Bank of India announced that the mandatory hedging provision for the foreign loans has been reduced from 100% to 70% to ease the External Commercial Borrowing norms. "On a further review of the extant provisions, it has been decided, in consultation with the government of India, to reduce the mandatory hedge coverage from 100 per cent to 70 per cent" said RBI in an official statement.
For ECBs raised earlier, the existing hedge will soon be adjusted to 70% of the total outstanding exposure said RBI. The ECBs that fall within aforesaid scope will be required to roll over the hedges to 70% mandatorily. This is expected to boost the local credit market and will increase the Indian companies borrowing abroad in the foreign exchange market.