The Reserve Bank of India (RBI) on Wednesday allowed oil marketing companies (OMCs) to raise up to $10 billion in foreign currency, also known as external commercial borrowing (ECB).
MK Surana, chairman and managing director, Hindustan Petroleum Corporation (HPCL) told CNBC-TV18 the move will help the company.
He said, the hedging requirement for OMCs has been done away with by the RBI and the overall ceiling is good enough for oil companies to manage working capital.
“This will help in expanding our sources of working capital management for inflows; it will increase dollar inflow in the system, it will help us manage our repayment schedules better and it will optimize total cost of working capital as well because hedging requirement can be seen more from the perspective of the companies rather than a mandatory requirement,” Surana added.
Surana said previously, for working capital management, ECBs could be raised from limited sources either direct-indirect equity holders or group companies for minimum maturity period of 5 years and that was required to be hedged off.
“So relaxation is that it can be done for 3-5 years and from other sources as well,” he said.