RBI limits external commercial borrowings to 6.5% of GDP

27 Dec 2018

1

Reserve Bank of India (RBI) has decided to set a 6.5 per cent upper limit for the total stock of external commercial borrowings (ECBs), which, under current GDP levels works out to $160 billion.

RBI said the decision to have a rule-based dynamic limit for outstanding ECB stock has been made in consultation with the government. 
RBI estimates the outstanding stock of ECB as on 30 September 2018 at $126.29 billion.
The central bank already has a rule-based exposure for foreign investors’ exposure in bonds. Foreigners are allowed to invest up to 6 per cent of the outstanding debt.
Meanwhile, approvals for External Commercial Borrowings (ECBs) in FY19 are expected to rise to $40 billion, from $29 billion in FY18, on relaxation in the limit on cost of funds, expanded list of borrowers, and the list of end use. According to rating agency Icra, though overseas cost of borrowing is rising, they (costs) remain competitive to domestic cost of borrowing for corporates.
Amid risk aversion of domestic investors and tight liquidity conditions, companies have, of late, increasingly sought to raise funds through overseas borrowings. 

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more