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Journalism of Courage
NEW DELHI, Aug 25: The finance ministry has permitted external commercial borrowings ECB for project related rupee expenditure in all sectors subject to the condition that funds raised be brought into the country immediately.
As part of the exercise to modify the ECB guidelines in view of the changes in the external sector, the ministry raised the limit for the 3 million scheme to 5 million, relaxed the average maturity profiles of short-term and long-term borrowings and enhanced the ECB eligibility under the exporters/foreign exchange earners scheme.
Thirdly, the conditions stipulate that the ECB raised would not be permitted for investment in stock market or in real estate.
The other conditions regarding the ECB eligibility for project finance, exposure limit etc. would remain unchanged.
The limit under the 3 million scheme has been raised to 5 million and the Reserve Bank of India RBI, as before, shall continue to be the approving authority.
As part of the modified guidelines, the average maturity requirement for ECBs under the long-term maturity window which are outside the ECB cap has been reduced to eight years from 10 years for ECBs upto 100 million and to 16 years from 20 years for ECBs upto 200 million for general corporate objectives.
The government has also relaxed the minimum maturity norms for 5 million scheme to three years simple maturity; for ECBs upto 20 million to three years average maturity; ECB for 100 per cent EOUs to three years average maturity for any amount; and for ECBs above 20 million to five years average maturity for all other sectors.
Under the exporters/foreign exchange earners scheme, the ECB eligibility has been raised to three times, from the current two times, of the average export performance during the last three years subject to a maximum of 100 million.
The modified guidelines have also specified that in order to enable corporates to hedge exchange rate risks, the domestic rupee denominated structured obligations would be permitted to be credit enhanced by international banks/international financial institutions/ joint venture partners.
The ECB guidelines which have been modified in the background of changed external conditions, the requirement of the corporate and access to the international capital, will become operative with immediate effect.
