ECB clearances will be easier now

The finance ministry has simplified procedures for approving external commercial borrowings. The ministry is introducing a single window system for these clearances, which will be managed entirely by the Reserve Bank of India. Currently both the RBI and the finance ministry are involved. Only, since the RBI is not yet ready to handle the flow of applications, this will take a little while to implement.

To begin with, it is expected, the government will double the present threshold limit of $10 million for applications processed through the RBI''s automatic window. What''s more, companies will be able to file applications with RBI’s regional offices instead of its Mumbai headquarters.

Procedures at the discretionary clearance window managed by the finance ministry will be simplified. The current four-stage procedure will be replaced by three stages. Today, applicants must visit the finance ministry offices in New Delhi to file their applications and when the loan agreement is signed, and then the RBI, when clearance under the Foreign Exchange Regulation Act is sought and loan draw-down begins. Soon applicants will need to visit only the RBI once, right at the end when Fera clearance is granted and draw-down permitted.

These will be interim changes, pending delegation of the entire approval authority to the RBI. The central bank has informed the ministry that it will take some time for it set up the required infrastructure to handle all cases. At present, its department of banking operations and development handles the work.

The government had opened the automatic window three years ago to enable smaller companies to secure clearances faster.