| The Reserve Bank of India (RBI) had barred the access of finance companies including banks to ECBs in November 2003. |
| Srei director Sunil Kanoria said the company has already tied up $100 million ECB for infrastructure and small and medium scale enterprises (SMEs) but cannot proceed due to the restriction. |
| "The FMO Netherlands, owned by the Dutch government, German government enterprise DEG and Belgium Investment Overseas, the investment arm of the Belgium government, have sanctioned $100 million to us already. The average cost of capital is around 6 per cent," he added. |
| Kanoria said Srei had at present around $90 million raised through ECBs in its basket. |
| At present, corporates other than in finance companies can mobilise up to $500 million through the ECB route without prior approval. |
| Kanoria argued that this regulation was against the interest of SMEs as they were not getting cheap funds from abroad routed through finance companies like Srei. |
| "Earlier, residuary non banking finance companies used to act as intermediaries, mobilising cheap fund through ECBs and then extending finance to SMEs and infrastructure projects. Now corporates have direct access to ECBs but SMEs do not have such a facility. Neither can SMEs access cheap funds in the domestic market," he said. |
| According to him, Srei had obtained approval from several foreign agencies for the ECBs. |
| He said residuary non-banking entities including Srei had requested the RBI to lift the restriction but the central bank had refused. |
| "We do not know what is the reason," said Kanoria. |
| Commenting on the year-old equipment rental operations of Srei, Kanoria said the outfit was close to doubling its turnover in 2004-05 to Rs 50 crore from Rs 30 crore in 2003-04. |
| Srei has invested around Rs 100 crore in the business, operated under the brandname Quipo. |
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