UPDATE 1-India raises overseas borrowing limit for some firms

(Adds details, central bank approval, analysts quotes)

By Rajkumar Ray

NEW DELHI, Sept 22 (Reuters) - India on Monday said it would allow local infrastructure companies to bring in more funds that had been borrowed overseas, a move which could see more capital come into the country and ease pressure on the rupee to weaken.

However, analysts said the global credit crunch meant the government's move to increase the limit on repatriated overseas borrowings to $500 million from $100 million for infrastructure companies was unlikely to spark an immediate rush of inflows.

The central bank approved the proposal on Monday evening, saying the measures would take effect immediately.

The rupee INR=IN hit a two-year low of 46.99 per dollar last week, according to Reuters data. It has recovered since then, helped by central bank intervention, closing at 45.45/46 on Monday.

"It will ease some funding needs of infrastructure companies and reduce their cost of borrowings as interest rates remain firm in India," said D.K Joshi, principal economist at domestic rating firm Crisil.

But he added it would be difficult for companies to raise funds from abroad easily.

"There is a credit squeeze globally."