January 16, 2014 / 12:06 PM / 4 years ago

Indian companies can swap overseas loans into equity via prevailing FX rate: cbank

MUMBAI, Jan 16 (Reuters) - Indian companies can convert their overseas loans through the external commercial borrowing (ECB) route into equity shares by using the prevailing forex rate on the date of the swap agreement, the Reserve Bank of India said on Thursday.

“It may be noted that the fair value of the equity shares to be issued shall be worked out with reference to the date of conversion only,” the RBI said.

The central bank also said the liabilities of a company can include lump sum fees or royalties or any other securities issued to a non-resident, which are allowed to be converted to equity shares under existing rules.

Reporting by Neha Dasgupta and Subhadip Sircar; Editing by Prateek Chatterjee

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