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Tuesday, Jan 20, 2004

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Changes in ECB guidelines `a step towards full convertibility'

Our Bureau

Mumbai , Jan. 19

THE recent amendments to the external commercial borrowings guidelines are largely in the direction of liberalisation and should augur well for corporates seeking overseas funds, industry representatives said.

"These changes are a step in the right direction. They will make finance to businesses at competitive rates,'' Mr R.C. Nandrajog, Vice-President - Finance, Tata Steel, said. This move, according to a chief financial officer of an FMCG company, takes the Indian rupee towards full capital convertibility.

One of the amendments involves removal of end-use restriction. "The ECBs would be allowed for corporate investments in industrial sector especially infrastructure sector. Money has to be parked abroad unless actually required. Usual restriction on the ECB for investment in the capital market or in the real estate will, however, continue,'' the Government's press release said.

In terms of eligibility, banks and financial institutions involved in the restructuring packages for the textile and steel sector have been permitted to the extent of their investment.

"Though Tata Steel has no need, this is a move that will help companies which are under financial restructuring,'' Mr Nandrajog said.

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