Following its credit policy decision, the Reserve Bank of India (RBI) has asked all authorised banks to allow prepayment of external commercial borrowings (ECB) of up to $400 million without its prior approval. The initiative would provide greater flexibility to the corporate sector in managing liquidity and interest costs, the RBI said.

Earlier, ECB prepayment of up to $300 million was allowed by the RBI without prior approval. In a separate notification, the RBI allowed domestic venture capital funds to invest up to $500 million in off-shore VC funds without prior approval. Such fund houses, however, will have to take the prior approval of SEBI for investments. The banking regulator also asked authorised dealers to allow remittances up to $10 million to Indian companies executing infrastructure projects for consultancy services procured from outside the country.

The earlier limit was $1 million. Through another notification, RBI permitted banks to open the foreign currency accounts of such ship manning and crew-management agencies that are rendering services to shipping companies incorporated outside India. In a separate notification, the RBI asked Urban Cooperative Banks (UCBs) to bring down the risk weightage on loans against gold and silver ornaments up to Rs one lakh to 50 per cent from the existing 125 per cent.

The RBI has also allowed authorised banks to remit money on account of donations by corporates for specified purposes, including creation of chairs in reputed educational institutions and donations to funds promoted by such institutions. The remittance would be subject to a limit of 1 per cent of the foreign exchange earning during the three financial years of the company or up to $5 million, the Reserve Bank of India said.