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A Bharat Petroleum oil pump station displays the price of unleaded petrol (0.89$) and diesel (0.66$) as pedestrians walk past in New Delhi, India, February 3, 2016Reuters file

India said on Wednesday it will allow state oil marketing firms to raise $10 billion in overseas loans to help them deal with a sharp rise in crude oil prices and a falling rupee.

The Reserve Bank of India said it will relax the external commercial borrowings (ECB) policy to allow the oil companies to raise external debt for working capital purposes and lifted the individual borrowing limit which was set at $750 million.

India, the world's third-biggest oil importer, depends on overseas markets to meet 80 percent of its oil needs.

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A logo of Indian Oil is picture outside a fuel station in New Delhi, India August 29, 2016. Rising crude oil prices in the international market could push petrol and diesel prices up in India, and consequently inflation.Reuters file

Economic Affairs Secretary Subhash Chandra Garg said the moves will help the oil companies to raise as much as $10 billion for maturity periods of three to five years.

The rupee has lost as much as 13 percent to the dollar since the beginning of the year, adding to the nation's oil import bill at a time when crude is hovering at around $85 a barrel.

State oil marketing companies have been tapping local markets to raise short-term funds to meet their working capital needs, mainly to pay for oil imports billed in dollars.

This, in turn, has pushed up demand for dollars in the local market, piling the pressure on falling rupee.

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The updated petrol price per litre is seen on a petrol pump display at a fuel station in New Delhi on January 16, 2013 (representational image).PRAKASH SINGH/AFP/Getty Images

India also waived a requirement for the companies to hedge dollars while raising funds from the overseas markets.

"We have a working capital needs on a permanent basis. This is a welcome and a positive move by RBI and will definitely bring down the import cost," A.K. Sharma, head of finance at Indian Oil Corp, the country's top refiner, said.

Earlier, the government allowed state refiners to buy 35 percent of their oil imports on a delivered basis to cut the imported cost.

State refiners are also looking at drawing from inventory to temporarily delay oil purchases.