The government today said it is contemplating relaxing norms governing external commercial borrowings (ECBs) to enable Indian corporates access higher foreign capital at low cost."A review is also underway to remove restrictions on foreign currency convertible bonds (FCCBs) for which an announcement will be made at an appropriate time," U K Sinha, joint secretary (foreign direct investment and ECB) in the finance ministry, said today.Sinha said restrictive measures continued to be applied on FCCBs under Fema, and they needed to be softened. "The finance ministry has already applied its mind on the issue," he said.Sinha also said his ministry was in favour of a cap on interest for overseas borrowings so that high cost external borrowing is discouraged.He made it clear that the government would not allow an unrestricted interest rate regime for ECBs in view of the East Asian meltdown caused by high interest rates and short duration of borrowings in the late 1990s.
