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New Delhi, Aug. 11 The Government may revise the all-in-cost ceiling for external commercial borrowing (ECBs) following representations from domestic companies that cost of funds in overseas markets had gone up and there was a need to widen the permissible spread over the London inter-bank offered rate (LIBOR).

“A number of ECB applicants have requested us to modify the spread as cost of funds had gone up. They want us to revisit the spread window. It is a live issue and a decision will soon be taken”, a Finance Ministry official said.

After the ECB policy change in May 2008, the all-in-cost ceiling for ECBs with average maturity for three-to-five years has been capped at 200 basis points over six-month LIBOR. For ECBs of average maturity of more than five years, the ceiling was pegged at 350 basis points over LIBOR.

The official also said that the Government was not looking at making any changes to the ECB policy other than revisiting the spread window. “The Government’s thinking is that there is no need to change the ECB policy. It was done only in May this year”.

More Stories on : Financial Policy | Overseas Borrowings

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