The RBI on lastweekend f liberalized External Commercial Borrowings (ECB) policy by including more sectors in the window.
“It has been decided to increase the ECB Liability to Equity Ratio for ECB raised from direct foreign equity holder under the automatic route to 7:1. This ratio will not be applicable if total of all ECBs raised by an entity is up to USD 5 million or equivalent,” RBI said in a press notification.
In a view to the extant provisions of Foreign Currency and Rupee ECBs and Rupee Denominated Bonds, it has been decided to stipulate a uniform all-in-cost ceiling of 450 basis points over the benchmark rate. “The benchmark rate will be 6 month USD LIBOR (or applicable benchmark for respective currency) for Track I and Track II, while it will be prevailing yield of the Government of India securities of corresponding maturity for Track III (Rupee ECBs) and RDBs,” it explained.
The RBI has been decided to permit Housing Finance Companies and port trust can avail of ECBs under all tracks. Such entities should have a board approved risk management policy and should keep their ECB exposure hedged 100 per cent at all times for ECBs raised, it pin point a word.
And the condition for investment raised through ECBs should avoid putting that money in real estate or purchase of land except when used for affordable housing, construction and development of SEZ and industrial parks/integrated townships across the country.This has boosed to the stock market on april 30th.
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