RBI opens ECB gates for telcos; tightens policy
Mumbai: The Reserve Bank on Wednesday changed the
guidelines for external commercial borrowings (ECBs) for
telecom companies by allowing them to use the fund raised
abroad to participate in 3G spectrum auction but tightened the
norms by discontinuing with the facility for FCCBs buyback.
Ahead of the 3G spectrum auction, scheduled for January
14, the central bank in a notification allowed telcos to use
ECB funds for buying airwaves.
Accessing the ECB route to raise money to participate
in 3G spectrum auction has been the long-standing demand of
telcom companies. They need mammoth funds to take part in the
auction as the reserve price is fixed at Rs 3,500 crore.
With today`s tweaking in the norms, the all-inclusive
ceiling for ECBs under the approval route will be 300 basis
points above London interbank offered rate-- the benchmark for
global borrowings and lendings-- for loans ranging from three
to five years.
The all-inclusive ceiling would be 500 basis points for
loans with a maturity of more than five years.
Earlier, RBI has removed the ceilings for companies to
raise funds when there was a global credit crunch.
Significantly, it decided to discontinue with the
facility for buyback of foreign currency convertible bonds
(FCCBs) by Indian companies with effect from January 1, 2010.
"Keeping in view the prevailing macroeconomic conditions
and global developments, especially the improvements in the
stock prices, it has been decided to discontinue the facility
with effect from January 1, 2010", the notification said.
The RBI said the new ECB norms for telecom sector will
apply with immediate effect.
The central bank also extended the time real estate
sector for raising overseas funds for developing integrated
townships under the approval route. Now, the facility is
extended to December 31 2010.
NBFCs, exclusively involved in financing the
infrastructure projects, have been allowed to avail of ECBs
from the recognised lender category including international
banks under the approval route, with immediate effect.
More from India
More from World
More from Sports
More from Entertaiment
- World's 30 most dynamic cities: Check out the full list
- China State TV said that its troops can reach New Delhi in 48 hours in war scenario; Indians slay it with their replies
- WATCH: Kieron Pollard's incredible one-handed six demoralises Fawad Ahmed
- IND vs ENG, 2nd ODI: Yuvraj Singh silences critics with 14th ODI hundred, fourth against England — WATCH
- Jallikattu protests continue in Tamil Nadu, sea of protesters camp on Marina beach