It will allow Indian companies to access cheaper funds from overseas markets.
The Reserve Bank of India (RBI) has further liberalised the norms for external commercial borrowing (ECB) that will allow Indian companies to access cheaper funds from overseas markets.
According to the new norms, the central bank has stipulated an uniform all in cost ceiling of 450 bps over the benchmark rate, which is most cases is the 6 month London Interbank Offered Rate (LIBOR). The benchmark rate for rupee denominated bonds will the prevailing yield of government bonds of corresponding maturity.
“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 $ 5 million or equivalent,” the RBI said.
via RBI relaxes external commercial borrowing norms – The Hindu