The Reserve Bank of India on Thursday liberalised the policy governing borrowings by oil companies, a move aimed at helping them muster funds to meet their crude import requirements.
In a notification, the central bank said: "It has been decided to revise, with immediate effect, the exposure limit to 25 per cent of the capital funds (from existing 15 per cent)."
It also allowed banks, in exceptional circumstance, to consider enhancement of exposure to oil companies up to a further 5 per cent of capital funds.
This enhancement in borrowing limit is applicable only to those oil companies who have been issued oil bonds by the government and do not have SLR (Statutory Liquidity Ratio) status.
The move comes amid state-run oil companies reporting that they would run out of cash in 2-3 months to import crude, whose price has doubled since the last retail fuel price hike in February.
The petroleum ministry has been pushing for an immediate hike in retail prices of petrol, diesel and LPG cylinders to pull out oil companies from a financial sinkhole.