In line with expectations late last evening, the RBI reversed some of the changes on external commercial borrowings (ECBs) that were taken during the global financial crisis to ease liquidity conditions. It is positive is that the norms will help filter out weaker credits from borrowing overseas. measures include ,
(1) Re-imposing all-in-cost ceilings at Libor + 300bps for loans from 3-5 years; and Libor + 500bps for borrowing over 5 years (all-incost ceilings had been withdrawn in Jan09); (2) Discontinuing Foreign Currency Convertible Buybacks.
However, in a bid to ensure adequate funds for the infrastructure space, the RBI has (1) further liberalized infra funding for NBFCs; and (2) included payment for spectrum allocation as an eligible end use. All other norms, including the limit of US$500mn per borrower per FY, and borrowing for integrated townships, have been left unchanged.
The measures may have come in a bit earlier than expected.
