Reserve Bank of India amends policy to allow larger convertibles buybacks, discounts

By Devika Patel

Knoxville, Tenn., April 21 - Reserve Bank of India said it has changed its policies regarding the buyback of foreign currency convertible bonds out of internal company accruals.

In its annual policy statement for 2009 to 2010, the country's Mumbai-based central bank stated that it will increase the total amount of permissible buybacks to $100 million in bonds per company from $50 million per company.

The higher amount of buybacks will be linked to larger discounts.

Accordingly, Indian companies will now be permitted to buy back their convertibles with a minimum discount of 25% for redemption amounts of up to $50 million; 35% for redemption amounts between $50 million and $75 million; and 50% for redemption amounts between $75 million and $100 million.

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