External Commercial Borrowings Policy - Liberalisation- September 2008

September 22, 2008: Reserve Bank of India has advised modification in some aspects of the ECB policy as indicated below:

2 (a) At present, borrowers in the infrastructure sector are allowed to avail ECB up to USD 100 million per financial year for Rupee expenditure for permissible end-uses under the Approval Route. Considering the huge funding requirements of the sector, particularly for meeting Rupee expenditure, the existing limit of USD 100 million has been raised to USD 500 million per financial year for the borrowers in the infrastructure sector for Rupee expenditure under the Approval Route.

ECBs in excess of USD 100 million for Rupee expenditure should have a minimum average maturity period of 7 years.

2 (b) In view of widening of credit spreads in the international financial markets, the all-in-cost ceilings Over 6 Months LIBOR for ECBs are modified as follows:

Three years and up to five years

Existing    200 bps
Revised    200 bps

More than five years and up to seven years

Existing    350 bps
Revised    350 bps

More than seven years

Existing    350 bps
Revised    450 bps

3. The amendments to the ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy such as USD 500 million limit per borrower per financial year under the Automatic Route, eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

The existing limit of USD 50 million for Rupee expenditure under the Approval Route for borrowers other than those in the infrastructure sector also remains unchanged.

ECB Guidelines revision in July 2008 ...Click here
Borrowers in services sectors eligible to avail ECB ...Click here
Special section on External Commercial Borrowings ...Click here

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