ECB Norms revised yet again

In a bid to attract capital flows, policy makers have further relaxed norms for ECBs – this is the third time in the last few weeks. Key measures include:

  • Permitting companies to bring back the entire US$500mn for rupee expenditure (this was earlier limited to US$100mn for infrastructure companies and US$50mn for corporates).
  • Corporates who had already raised ECBs, but were prohibited by earlier guidelines to bring funds in for domestic use, can now bring these onshore. This may have some impact on near-term inflows.
  • The minimum avg maturity period of 7 years for ECBs of over US$100mn for rupee expenditure by the infrastructure sector has been dispensed with.
  • For telecom companies, payment to obtain licenses for 3G spectrum is now considered an eligible end-use norm for ECBs.

Since the intensification of the financial crisis, there have been coordinated policy measures to infuse liquidity and stem growth deceleration.