Government allows service firms to raise up to $100 million overseas debt
31 May 2008
The government has allowed service sector firms to borrow up to $100 million overseas through the external commercial borrowing route in a bid to further shore up the rupee.
At present, borrowers in the services sector are not eligible to avail ECB under the automatic route. It has been decided that henceforth borrowers in the services sector viz hotels, hospitals and software companies may avail ECB up to $100 million for import of capital goods under the approval route, the statement said.
The government had earlier announced an easing of overseas borrowing rules for firms, raising overseas borrowing limit for firms to $50 million from $20 million. It also allowed firms in the infrastructure sector to borrow $100 million from abroad, and raised the foreign institutional investment limit in government and corporate bonds to $5 billion and $3 billion, respectively.
A finance ministry statement said hotels, hospitals and software companies could avail themselves of overseas borrowings of up to $100 million to import capital goods under the approval route.
''The External Commercial Borrowing (ECB) policy is regularly reviewed by the government in consultation with Reserve Bank of India (RBI) to keep it in tune with the evolving macroeconomic situation, changing market conditions, sectoral requirements, the external sector and lessons of experience,'' the government said in a release.
The amendments in the ECB policy will come into force on the date of notification of regulations/directions issued by the Reserve Bank in this regard under the Foreign Exchange Management Act, 1999.