ECB policy modified to modulate capital inflows

New Delhi, May 18 (UNI) The Government today brought about modifications in its policy on External Commercial Borrowing (ECB with a view to modulating the capital infolows through this route.

The ECB policy has constantly been reviewed by the Government in consultation with the Reserve Bank of India (RBI) to keep it in tune with the evolving macroeconomic situation, changing market conditions, sectoral requirements, the external sector and the lessons of experience.

The following are the modifications carried out in the policy: (i) As per the extant ECB policy, utilisation of ECB proceeds for real-estate is not permitted. However, the term 'real-estate' excludes development of integrated townships.

It has now been decided to withdraw the exemption accorded to the 'development of integrated township' as a permissible end-use of ECB.

(ii) In view of the upgradation of the countrys sovereign credit ratings, existing all-in-cost ceilings are revised as follows: Average Maturity Period All-in-Cost ceilings over 6 Month LIBOR Existing New 3 years and up to 5 years 200 basis points p.a. 150 basis points p.a.

More than 5 years 350 basis points p.a. 250 basis points p.a.

The changes will apply to ECBs both under the automatic route and the approval route.

These amendments in ECB policy will come into force on the date of Notification of Regulations and directions issued by the RBI in this regard under the Foreign Exchange Management Act, 1999 (FEMA).

UNI