External borrowing norms eased further

The Reserve Bank of India (RBI) has further liberalised the norms for corporates to raise funds through external commercial borrowing (ECB) route.

Now, corporates can avail ECB for raising additional $250 million (average maturity 10 year) under this route.

This additional borrowing facility is over and above the existing limit of $500 million during a financial year under automatic route with average five-year maturity, RBI said in a communication to authorised dealers. The prepayment and call/ put options will not be available for such ECBs ($250 million category) upto to 10 years.

Further, RBI has raised limit on prepayment of ECBs, without RBI's prior approval, to $300 million from $200 million to provide greater flexibility to corporates in managing their liquidity and interest costs.

Corporates will continue to be governed by minimum average maturity criterion for ECBs.

The central bank also liberalised norms on remittances by corporates to meet initial and recurring expenses for overseas offices.

Now corporates can remit upto 15 per cent of the average annual sales or turnover in the last two financial years or up to 25 per cent of the net worth, whichever is higher for initial expenses.

The old limit was 10 per cent of sales.

For recurring expenses, the limit has been raised to 10 per cent of the average annual sales or turnover during the last two financial years. Earlier, the limit was fixed at five per cent.

Now authorised dealers can allow remittance by Indian company, having overseas offices, to acquire immovable property to conduct business as well as residential premises for its staff.