The Reserve Bank of India (RBI) has okayed the proposal to further liberalise the external commercial borrowing (ECB) policy. The limit for eligible borrowers to avail of ECB under the automatic route per financial year has been enhanced for corporates in real sector, industrial sector and infrastructure sector to $750 million or equivalent against the present limit of $500 million.
For companies in specified service sectors viz. hotel, hospital and software, the limit has been hiked to $200 million or equivalent against the present limit of $100 million.
According to the RBI, all eligible borrowers have been permitted to avail of ECBs designated in the Indian rupee from foreign equity holders, under the automatic/approval route, as the case may be, subject to compliance with extant ECB guidelines.
“Corporate in the infrastructure sector can avail of ECBs for interest during construction (IDC) as a permissible end-use, under the automatic/approval route, subject to IDC being part of project cost and is capitalised,” the RBI said.
Considering the specific needs of the infrastructure sector, companies in the sector have been permitted to utilise 25 per cent of the fresh ECB raised towards refinancing the rupee loans availed by them from the domestic banking system, under the approval route, subject to the condition that at least 75 per cent of the fresh ECB proposed to be raised should be utilised for capital expenditure towards a ‘new infrastructure’ project.
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