The government has decided to raise the cumulative external commercial borrowing (ECB) limit for companies by $10 billion, to $30 bn. A notification is to follow.
However, the ceiling for foreign institutional investors in bonds floated by companies as well as the government remains untouched.
The move comes after companies have already raised ECBs of $26 bn, breaching the formal cap. Actual permission for ECB is given by the Reserve Bank of India on a case-to-case basis.
“There was a lot more demand for ECBs from companies,” said a finance ministry official.
As mentioned earlier, FII caps for investing in the Indian debt market haven’t changed. These are $10 bn for government securities, $15 bn for corporate bonds and $25 bn for long-term corporate bonds (for infrastructure).
Ashvin Parekh, partner in Ernst & Young told Business Standard the move denotes a happy position on ECBs.
