Strong case for relaxing curbs on overseas borrowings: sources

The government may consider relaxing external commercial borrowing (ECB) norms by this month-end to help India Inc access funds overseas.     

However, the ECB policy should not be linked to the rupee value, sources in the finance ministry said.     

"The ECB policy is independent of status of rupee. ECB relaxation will be based on credit requirements of productive sectors. We believe there is a strong case for easing ECB norms," top finance ministry sources said.     

The Reserve Bank of India and finance ministry officials will meet by the month-end to take a view on easing the norms for external borrowings.     

The government had last year imposed curbs on ECB, limiting remittance of such funds only up to $20 million for rupee expenditure and that too with RBI approval.     

However earlier this year, this limit was relaxed to $100 million for infrastructure companies and $50 million for other firms.     

Experts say the government should now give much more flexibility to the corporates to raise funds abroad since capital flows are no longer in excess and the rupee has been depreciating.     

But the finance ministry sources said the value of rupee cannot guide the ECB policy.     
Yesterday, the RBI said it will continue to sell dollars in the light of developments in forex market.

As such, the rupee in early trade today rose by 62 paise to 46.27/28 against the US currency.