labels: real estate, banking & finance policies, investments, banks & institutions
ECB proceeds now allowed for real estate news
15 July 2002
New Delhi: The central government has said companies can now use proceeds from external commercial borrowings to invest in the real estate of other domestic companies. But the funds cannot be used to acquire stakes in those companies.

The government has issued a notification in this regard saying proceeds from external commercial borrowings as well as those from ADRs and FCCBs could be used to buy shares of public sector companies in the course of their disinvestment.

This has been done to encourage foreign direct investment in new properties instead of companies paying a higher premium for properties in prime locations.

The finance ministry clarification means that while a company can buy assets, it will not be allowed surrogate transfer of ownership by using the proceeds from external commercial borrowings.

While the finance ministrys position has prevented the possibility of companies using the foreign direct investment avenue in any other sector to set up a concern and then seek permission to avail external commercial loans for funding the takeover of other going concerns, it has allowed them to invest proceeds from external commercial borrowings to fund their horizontal expansion programmes.


 


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ECB proceeds now allowed for real estate