Press Information Bureau

Government of India

Ministry of Finance

22-August-2012 20:56 IST

The High Level Committee on External Commercial Borrowings (HLCECB) met today and the following decisions were taken:

a. SIDBI will be permitted as an eligible borrower for accessing ECB for on-lending to MSME sector subject to certain conditions which will be finalized in consultation with the RBI.

b. (i) The eligible Non-Resident entities will be allowed to credit enhance the issue of INR bonds by all companies. The minimum maturity period of such bonds has also been reduced from seven years to three years. (ii) FIIs will be permitted to invest in these bonds upto the equivalent of US$5 billion within the overall corporate bond limit of US$45 billion. c. It has already been decided to allow ECBs for low cost housing projects. It has been further decided that entities like NHB and Housing Finance Companies (HFCs) will be included as eligible borrowers for financing such low cost housing projects.

d. Re-financing of buyer’s credit for import of capital goods in the infrastructure sector will be placed under automatic route subject to certain conditions. It has also been decided to increase the maturity of such buyer’s credit to maximum five years.

e. In June 2012, a new scheme was introduced to allow companies in the infrastructure and manufacturing sector to re-finance their existing rupee loans through ECBs subject to the condition that their ECB liabilities are extinguished from their future forex earnings. It has been decided to enhance the maximum permissible limit for ECB that can be availed by such companies from 50% to 75% of the average forex earnings realized during the past three financial years or 50% of the highest forex earnings recorded in any of the last three years, whichever is higher. It has also been decided to include SPVs of companies who are in existence for at least one year under the ambit of this scheme.

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DSM/RS

Eligible borrower status for SIDBI permits ECB access for on lending to MSMEs under specified conditions. SIDBI is permitted as an eligible borrower to access ECB for on lending to the MSME sector subject to specified conditions. Non resident entities may credit enhance INR bond issues and bond maturity requirements have been shortened; foreign portfolio investors may invest in these bonds within the corporate bond envelope. National housing institutions and housing finance companies are eligible borrowers for low cost housing financing. Refinancing of buyer's credit for infrastructure capital goods is placed under the automatic route with an increased maturity, and a refinancing scheme for infrastructure and manufacturing firms has an increased ECB conversion limit and now includes qualifying SPVs.