Govt relaxes ECB norms for infra firms

The government has relaxed external commercial borrowing (ECB) rules for infrastructure firms, and they will now be allowed to bring in $500 million under the approval route. ECBs of over $100 million has to be for at least for seven years.The interest rate cap on ECBs of over seven years has been raised by 100 bps. The ECB limit on non-core sector firms is unchanged at $50 million. The new rules will come into effect after the RBI gives its nod.Earlier in the day, Department of Economic Affairs (DEA) Secretary Ashok Chawla said the government was planning to relax the ECB norms in view of the unfolding global scenario.The easing of norms, he added, will help industry, especially the infrastructure sector, to access cheap funds overseas in view of the hardened interest rate situation in the domestic market.UTVi Analysis:
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Earlier, govt had tightened ECB norms to $20mn for rupee expenditure
In May this year this was relaxed to $100mn for Infra and $50mn for other sectors
Last year owing to huge capital flows rupee had strengthened to 39/$ levels
Reports say govt may relax norms to increase cap for rupee expenditure for Infra sectors
Currently ECB of upto $100mn allowed for rupee expenditure in infra sector
For other sectors the limit is $50mn