Funds to ADAG via automatic route barred

Under the automatic route,a company can raise funds directly from the overseas market,whereas it will require prior RBI approval for raising funds under the non-automatic route. RBI can reject applications or withhold its decision for long.

“The RBI usually takes about 6-8 weeks for examining applications under the approval route. But in doubtful cases,the time taken can be frustratingly long,” said a legal advisor who specialises in the area of external borrowings at a leading law firm. So,even though RBI has not directly banned ADAG from accessing ECBs; the central bank has made it extremely difficult for the group to raise money abroad.

The implication of the approval route for ADAG can be gauged from the nature of its previous overseas borrowings. Of the $5.3 billion that ADAG has raised so far in 16

applications,more than 80 per cent,or $4.25 billion,has come through the automatic route in 12 applications. The remaining 20 per cent,or $1.05 billion,was raised in 4 applications under the approval route. Reliance Communication has led the chart with 9,of a total of 12,via the automatic route.