The Finance Ministry has reviewed the ECB policy and decided to further liberalise the ECB policy. Accordingly, at present, borrowers in infrastructure sector are allowed to avail ECB up to $100 million for rupee expenditure for permissible end-uses under the Approval Route. Considering the huge funding requirements, particularly for meeting Rupee expenditure, it has been decided to enhance the existing limit of $100 million to $500 million per year for the borrowers in the infrastructure sector under the Approval Route. Borrowings in excess of $100 million should have a minimum average maturity of seven years.
In addition, in view of widening credit spreads in the international financial markets, it has been decided to modify the all-in-cost ceilings in respect of ECBs with minimum average maturity of over seven years. The revised all-in cost ceilings for ECBs will now be 450 basis points vs 350 basis points for an average maturity period of over seven years. As regards companies other than those in infrastructure sector the decision of May 2008, to allow them to borrow upto $50 million for Rupee Capital expenditure under the Approval route, remains unchanged.
All other aspects of ECB policy such as $500 million limit per company per year under the Automatic Route, eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements also remain unchanged. The above amendments in ECB policy will come into force on the date of Notification of Regulations/directions issued by the Reserve Bank in this regard under the Foreign Exchange Management Act, 1999.
