Infrastructure companies can borrow more

September 22nd, 2008 - 11:43 pm ICT by IANS  

Mumbai, Sep 22 (IANS) The finance ministry in consultation with the Reserve Bank of India (RBI) Monday permitted infrastructure companies to borrow more funds from overseas with immediate effect.According to the ministry, the annual limit on borrowing for the companies in the infrastructure sector has been raised to $500 million from the existing $100 million because of huge funding requirements of the sector, particularly for meeting rupee expenditure.

“Borrowings in excess of $100 million will require a minimum average maturity of seven years,” said a ministry release.

The ministry also said that in view of the widening of credit spreads in the international financial markets, the all-in-cost ceiling for external commercial borrowing (ECBs) at which infrastructure companies can borrow has been revised to 450 basis points from 350 basis points (for seven-year maturity).

“All other aspects of the ECB policy such as $500 million limit per company per year under the automatic route, eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements also remain unchanged,” said the ministry.

Last week, after the tremble in the Wall Street, the RBI announced certain measures to alleviate transient pressure to answer any liquidity crunch.

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