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The Reserve Bank of India is looking to partially relax the External Commercial Borrowing norms for India Inc, said a top official.
“We cannot open (the ECB window) fully given the current situation. The Sahoo committee has made certain recommendations and we are looking at that. It is not that we will open in a big bang way but there is scope,” said HR Khan, Deputy Governor, on the sidelines of a conference on the role of foreign and domestic investments.
The Deputy Governor stated that the RBI has made many relaxations in the last five years for raising ECB, including seven-year corporate general purpose loans from direct equity holders, and some in the area of infrastructure and affordable housing.
Khan also reiterated that the RBI is working on allowing settlements of government bonds in the EuroClear system, the world’s biggest securities settlement system.
“We have the proposal of EuroClear and Clearstream settlement. There is a Budget announcement also on international settlement. So we are working on it to see how we can balance between the loss of liquidity in the local market and providing ease of trading for the overseas investors... Right now, it is for gilts and not corporate bonds,” Khan added.
Pointing out that China is not fully convertible on capital account and that India is more convertible than the former, Khan said convertibility per se is not going to be a determinant for FDI flows or for exports to grow.
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