Infrastructure finance companies can raise funds upto 75 per cent of their net worth through external commercial borrowing (ECB) without seeking clearance from the Reserve Bank of India (RBI).
This is because the central bank liberalised the norm in order to facilitate greater fund flow into infrastructure sector. According to the existing norm, these companies could raise only 50 per cent of their net worth through ECB via automatic route.
Between Apr-Dec 2012, firms raised about $28 billion via ECBs, compared to $31 billion during the corresponding period last year.
The RBI also decided to reduce the hedging requirement for currency risk from 100 per cent of their exposure to 75 per cent. The central bank implemented the new norms with immediate effect.
Indian companies raised $1.34 billion (Rs 7,400 crore) through ECB and foreign currency convertible bonds ( FCCB) in November to fund modernisation, foreign acquisitions, import of capital goods and onward lending.
Of the total amount raised in November, $1.10 billion was via the automatic route, while $240 million was raised through the approval route, which requires case-by-case approval from RBI. According to RBI data, companies raised $4.29 billion via ECBs and FCCBs in October.
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