RBI liberalises ECB norms

The Reserve Bank further relaxed external commercial borrowing guidelines and allowed companies to bring in funds up to $500 million for rupee expenditure under the automatic route.

Faced with outflow of foreign capital, the Reserve Bank on Wednesday further relaxed external commercial borrowing guidelines and allowed companies to bring in funds up to $500 million for rupee expenditure under the automatic route.

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The RBI also permitted companies to raise funds through ECBs for obtaining licence for 3G spectrum and gave firms the flexibility to bring the proceeds into India pending utilisation of funds.

Apparently, one reason precipitating the relaxation of norms is the government and regulators’ urgency to ensure foreign investment, as in all likelihood, due to the global liquidity crunch, possibility of spectrum-bidding fetching much foreign funds looks bleak.