RBI enables Telangana to raise FRBM loans


Hyderabad: Following the request of Chief Minister K Chandrashekhar Rao (KCR) to lift the economic ban imposed on the state, the Reserve Bank of India on Friday allowed the state to opt for Open Market Borrowing (OMB) of Rs 4,000 crore.

Telangana will be allowed to borrow the sum of money by auctioning the state properties no later than June 7. After a two-month long standoff, the finance ministry conceded, allowing the state to raise funds under the Fiscal Responsibility and Fiscal Management Act (FRBM) this year.

Telangana has decided to increase FRMB loans worth Rs 53,000 crore for this year, but the center may impose a 20% cut on borrowings. This means that the state will only be allowed to borrow Rs 43,000 crore.

“The Ministry of Finance has authorized the increase in borrowing. However, the amount of the loan to be raised by the state for the whole of the 2022-23 financial year will be known next week, “said an official from the Ministry of Finance, quoted by The new Indian Express.

Earlier, Telangana Finance Secretary K Ramakrishna Rao was on a five-day visit to New Delhi. Rao presented the state government’s requirements for open market borrowing. The argument seems to have convinced the department.

The seriousness of the issue could be understood by the fact that Telangana was willing to go to the Supreme Court, asking for the ban to be revoked. Anticipating the state’s victory in the supreme court, the center allowed Telangana to borrow on the open market.

At the beginning of May, the center decided to stop the FRBM for Telangana, which prevented the state from borrowing on the open market.


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