Amid a sharp depreciation in the rupee,the Reserve Bank of Indixa has allowed telecommunication companies to raise forex loans to refinance third generation spectrum rupee loans until March 2014. Earlier,companies were allowed to raise ECBs within 12 months of their payment to the government towards spectrum allocated. In 2010,the government auctioned 3G spectrum licences to companies through which it raised around R67,000 crore. Companies had borrowed domestically to finance their spectrum licence purchases. However,a rise in domestic interest rates had raised debt-service requirements. Given the global interest rates were far lower,companies were subsequently allowed to refinance these high-interest rupee loans and reduce their debt burden. Companies proposing to fund the payment for spectrum allocation directly out of the proceeds of the ECBs may continue to avail of the ECBs under the automatic route. In a separate notification,the central bank has also allowed civil aviation companies to raise forex loans for working capital purposes until December,an extension of another nine months. The central bank also extended the scheme allowing companies to buy back their foreign currency convertible loans until December. The buyback scheme was first announced by RBI in 2008 as the global crisis hammered share prices,making convertibility of such FCCBs a costly affair for the issuers. The scheme had expired in March. RBI said the buyback value of the FCCBs must be at a minimum discount of 5% on the accreted value. Meantime,RBI has discontinued the scheme under which infrastructure companies were allowed to raise renminbi loans subject to an overall limit of $1 billion as this scheme is unused since September 2011 when it was first announced. While the measures are unlikely to have a significant impact on the value of the rupee,they may help lift sentiment slightly. The rupee had hit an all-time low of 59.98/$ on June 20 and ended at 59.68/$ on Tuesday.
