Govt eases ECB norms; raises three sub-limits

Shishir Sinha New Delhi | Updated on September 15, 2011

No change in overall ceiling

The Government today took bold decisions to help the Indian companies mobilise capital at lower rate.

At a meeting of High Level Committee on external commercial borrowings (ECB), it was decided to change the three sub-limits without changing the overall ceiling under ECB.

The Economic Affairs Secretary, Mr R. Gopalan, chaired the meeting which was attended by senior officials of the Ministry and the Reserve Bank of India. Now, the new decision will come into effect after notifications from the RBI.

Highlights of the decision of High Level Committee on ECB:

No change in overall ceiling of $30 billion

Except Service, NGO and Microfinance, for all other sectors, limit raised from $500 to $700 million

Limit under service sector (Hospital/Tourism) hiked to $200 million

NGO and Microfinance Institutions can now raise $10 million

ECBs with increased sectoral limit will be of above 5-year maturity and can be raised under Automatic Route

ECB can be raised in Renminbi (RMB)

High networth individual (HNI) can invest in Infra Debt Fund

Interest during construction under ECB permitted

Refinance of buyer’s/supplier’s credit permitted through ECB

Withdrawal of withholding tax on interest on ECB to be discussed with the Department of Revenue

90 per cent of agenda items were based on India Inc’s suggestions at a meeting with the Finance Minister on August 1

Published on September 15, 2011

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