INSUBCONTINENT EXCLUSIVE:
MUMBAI: Simplification of external commercial borrowing (ECB) guidelines has opened a new window of funding for home finance companies and
port operators in India, increasing the prospects of a fresh round of overseas borrowings.
In a notification posted on its website on
Friday, the Reserve Bank of India made all-in-cost ceiling for ECBs uniform at 450 basis points over the benchmark London Interbank Offer
Rate (LIBOR), doing away with different slabs for different maturities
ceiling, expanding the list of eligible borrowers to housing-finance companies and port trusts as well as simplifying restrictions around
This notification continues to liberalise the ECB framework, recognising that companies require increased flexibility and access to various
an increase in overseas borrowing rates for Indian companies after a rise in the benchmark 10-year US bond in 2018.
Companies in the
director at mortgage lender HDFC.
Housing finance companies were allowed to borrow in foreign currency, but only after RBI approval and the
financing for a sector growing at more than 20 per cent and which is likely to keep growing due to the massive home shortage in the
immediately.
The US benchmark bond has risen above the 3 per cent mark, a four-year high, earlier last week.
The RBI also increased the ECB
liability-to-equity ratio for ECB raised from direct foreign equity holder under the automatic route to 7:1
This means, for every rupee of equity, companies can now borrow seven rupees through ECBs.
