23/10/2008

RBI eases external commercial borrowing restrictions

Reserve Bank of India allowed external commercial borrowings, or ECB, up to $500 million (Rs2,465 crore) per year under the automatic route for rupee or foreign currency expenditure by local firms. The Indian government on 23 September raised the overseas borrowing limit to finance their rupee expenditure fivefold to $500 million in a move to provide easier access to funds for infrastructure firms. This has now been extended to firms across sectors, and put in the so-called automatic route, making the approval of the regulator for such loans automatic and cutting down the procedural delays.

RBI has also removed the seven-year minimum average maturity requirement for ECBs of more than $100 million by infrastructure companies. RBI also allowed ECBs for making payments for 3G spectrum licences, a move that will help telecom companies.


The new norms take effect immediately.