The Reserve Bank of India has eased overseas borrowing rules for local corporates by raising the ceiling for the interest that firms can pay for borrowing abroad.

The move was on a review of the developments in the global financial markets and current macroeconomic conditions, said the RBI in a release.

The all-in-cost ceiling over six month LIBOR for average maturity of three and up to five year had been raised to 350 basis points from 300 bps, it said. It kept the ceiling unchanged in case of maturity over five years at 500 bps.

The RBI also directed that funds raised abroad meant for rupee expenditure in India would have to be brought in immediately to local rupee accounts.

The new rules would be effective immediately while the all-in-cost ceiling would hold until March 31, 2012 after which it would come up for review, the RBI said.