Money & Banking

Tweaking the policy in instalments

Arvind Jayaram | Updated on November 15, 2017

The RBI, in its policy liberalisation of September 25, 2011, raised the ECB limit. The limit was hiked by 50 per cent to $750 million for real estate, industrial and infrastructure firms, and by 100 per cent to $200 million for hotels, hospitals and IT firms by .

Since then, the RBI has tweaked the ECB policy a number of times with the objective of facilitating higher overseas borrowings.

The following are among the changes that have been made to the policy:

In September 2011, the ECB policy in respect of the infrastructure sector was liberalised to permit credit enhancement for domestic debt by direct and indirect foreign equity holders.

In the same month, infrastructure firms were permitted to avail themselves of ECBs in renminbi up to $1 billion.

Then, in November, the all-in-cost for ECBS over the six-month LIBOR was hiked by 50 basis points for loans with a tenor of three- to-five years.

Subsequently, in December, microfinance institutions were allowed to raise ECBs up to $10 million in a financial year under the automatic route and the limit for NGOs was doubled to $10 million as well.

In February 2012, developers of National Manufacturing Investment Zones (NMIZs) were allowed to tap ECBs under the approval route for infrastructure facilities, a benefit already allowed to Special Economic Zone (SEZ) developers.

And, in March 2012, the higher all-in-cost for ECBs was extended for a period of six months.

Published on May 08, 2012

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