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Our Bureau

Mumbai, Nov. 23 Overseas borrowings by Indian corporates saw a decline in August compared to June and July, due to the restriction imposed by the RBI on external commercial borrowings (ECB).

According to figures released by the RBI, the total amount of ECBs plus foreign currency convertible bonds (FCCBs) raised by Indian corporates was around $1.5 billion in August this year. In June, corporates had raised around $3.3 billion in July and $2.8 billion in June through ECBs and FCCBs. In August, the RBI had restricted the ECB amount to a maximum of $20 million per company and that, too, only for foreign currency expenditure.

Earlier a single company could raise ECB up to $500 million in a year to meet both rupee and foreign currency expenditure. A senior official with a public sector bank said that going by the ECB data, the RBI has achieved its aim to curb foreign inflows.

“Earlier ECBs could be freely converted into rupee, but the RBI restrictions have put an end to that. As resources were cheaper oversees than in India, many corporates may have raised money, which could have found its way into the domestic stock market. That is why the RBI decided to curb the foreign inflows,” he explained.

More Stories on : Overseas Borrowings | RBI & Other Central Banks

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