Indian companies raised over $2.8 billion using external commercial borrowing (ECB) and foreign currency convertible bond (FCCB) routes in September this year.

As per data released by the Reserve Bank of India (RBI) on external commercial borrowings (ECB) and foreign currency convertible bonds (FCCB), both through the automatic route and the approval route, for September this year, Indian companies raised a little over $370 million through the automatic route.

A major share of the overseas borrowing was accessed through the approval route, with over $2.4 billion coming through this route.

Total ECB/FCCB during September 2008 through the automatic route totalled over $370.2 million while maturities varied from three years to 10 years.
 
ECB/FCCB raised through the approval route totalled over $2.46 billion.
  
RBI had, early this month, announced a relaxation in the external commercial borrowings (ECB) policy.

Under the new norms, companies can raise ECBs up to $500 million per financial year for rupee expenditure and/or foreign currency expenditure for permissible end-uses under the automatic route. Accordingly, the requirement of minimum average maturity period of seven years for ECB more than $100 million for rupee capital expenditure by the borrowers in the infrastructure sector has been dispensed with.

The ECB route can also be used for obtaining licence/permit for 3G spectrum to further develop the telecom sector in the country.

While earlier guidelines required ECB proceeds to be parked overseas until actual requirement in India and kept invested in prescribed liquid assets, the new policy gives borrowers the flexibility to either keep these funds off-shore or keep it with the overseas branches/subsidiaries of Indian banks abroad or to remit these funds to India for credit to their rupee accounts with AD Category I banks in India.