Public CompanyCredit limit on structured obligations up to $1 billion
The Union government’s high-level committee on external commercial borrowings (ECBs) has decided to enhance the annual limit of credit on structured obligations to $1 billion from $600 million.
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The borrowing through structured obligations is required to have a minimum average maturity of seven years.
The proposal applies only to financing through capital market instruments and not to basic rupee loans, already allowed under the general permission in vogue.
This facility would be extended only to companies, non-banking financial companies and financial institutions exclusively involved in the development and financing of infrastructure.
The decision is part of an overall policy change being contemplated in view of the increased foreign capital flow into the country.
The committee has also decided to extend the ECB window available for funding the payment made for telecom spectrum allocation instead of just the licence fee.
Among other decisions taken at a meeting of the committee on November 12, it was decided that the present policy dispensation of all-in cost under the approval route would be allowed to lapse from January 1, 2010. The current all-in cost ceiling is six months Libor plus 300 basis points and, alternately, six months Libor plus 500 bps.
The ECB permission available for integrated townships has, however, been permitted only till December 31. The government had decided in June to continue with the existing policy of permitting development of integrated townships as a permissible end-use under the approval route until December.