The Reserve Bank today proposed that Indian corporates eligible for raising external commercial borrowings (ECBs) could also raise funds overseas by issuing Rupee linked bonds, a move expected to open another window for cheaper resources.

"The corporates, which at present are permitted to access ECB under the approval route, will require prior permission of the RBI to issue such bonds and those coming under the automatic route can do so without prior permission of the RBI," the central bank said in a draft framework on issuance of Rupee linked bonds overseas.

The bonds may be floated in any jurisdiction that is Financial Action Task Force (FATF) compliant, it added.

The subscription, coupon payments and redemption may be settled in foreign currency.

End use restrictions will be as applicable under the extant ECB guidelines, it said, adding that for USD-INR conversion, RBI's reference rate on date of issue will be applicable.

The guidelines also proposed that international financial institutions, of which India is a shareholding member, intending to deploy the entire proceeds of the issuance in India, shall not require prior permission for the issuance of Rupee bonds overseas, irrespective of the amount of issuance.

"In other cases, where an International Financial Institution (of which India is a member) wishes to retain the freedom to deploy the issue proceeds in any member country, would require prior permission from the RBI or Government of India," it said.

It further said that any investor in these bonds will be eligible to hedge both the foreign currency risk as well as credit risk through permitted derivative products in the domestic market.

Banks incorporated in India will not have access to these bonds, it added.

RBI has invited comments on the draft guidelines by June 15, 2015.

The central bank, in its April policy, had said that few international financial institutions were permitted to issue rupee bonds in overseas markets, subject to certain conditions.

These issues have been received with interest, it said, adding that the appetite for rupee debt amongst international investors is a welcome development.

"In view of this, it is proposed to expand, in consultation with the Government of India, the scope of such bond issues by the international financial institutions as also to permit Indian corporates eligible to raise ECB through issuance of rupee bonds in overseas centers with an appropriate regulatory framework," it added.