Centre relaxes ECB guidelines - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Centre relaxes ECB guidelines

Feb 10, 2000

The government has eased the guidelines pertaining to the issue and proceeds of external commercial borrowings (ECBs). The move is aimed at making the ECB market more accessible to domestic companies. Among the highlights of the new policy are:

  • A simple two step procedure introduced
  • End use norms for funds raised relaxed. The companies will however not be permitted to invest in real estate and the capital markets
  • Guidelines for infrastructure related projects eased significantly
  • 100% prepayment from export proceeds permitted
  • 100% export oriented units permitted to fund 60% of project cost via ECBs

The guidelines will go a long way in improving the accessibility of the ECB markets for domestic companies. The infrastructure sector will benefit as a result of the decision to permit promoters to fund equity stakes upto US$ 200 m in special purpose vehicles. Core sector projects have been permitted to raise ECBs equivalent to 50% of the project cost. This move will bring in much needed funding for these sectors.

The high interest rates in the domestic markets are a deterrent for companies to set up capital intensive projects. With ECB rates much lower than domestic rates companies can get access to cheaper finance. In view of India's comfortable foreign exchange reserves the decision to ease the guidelines in a step in the right direction. The companies opting for this route must however be cautious of the fact that a depreciation in the value of the rupee vis a vis the US Dollar could significantly impact the cost of borrowing (in the absence of hedging). The government must therefore also look at easing guidelines pertaining to foreign exchange cover.


Equitymaster requests your view! Post a comment on "Centre relaxes ECB guidelines". Click here!

  

More Views on News

This One Trigger Could Turnaround Yes Bank's Stock Price (The 5 Minute Wrapup)

Oct 16, 2019

If Yes Bank manages to do this, it could be the start of a much-needed turnaround for the bank.

Gold could Hit 40,000 Sooner Than Expected (Profit Hunter)

Aug 16, 2019

Domestic gold prices are firing on both engines now. Gold prices could touch 40,000 faster than you could imagine.

3 Rebirth of India Opportunities Are Racing Ahead in These Gloomy Times... podcast (Views On News)

Jun 28, 2019

Tanushree Banerjee shares an update on the Rebirth of India and reveals her top 3 trends...

How to Separate Fact from Fiction (Vivek Kaul's Diary)

Feb 5, 2019

Vern Gowdie talks about what happens when there's too much debt in the system.

A Perfect Example of Multibagger Opportunities in the Rebirth of India (The 5 Minute Wrapup)

Jan 29, 2019

A structurally strong Indian Steel Industry will help India achieve 8%+ GDP growth in the coming years.

More Views on News

Most Popular

My 3 Best Small-cap Stocks to Get Rich in this Market Rebound (Profit Hunter)

Oct 14, 2019

This is once in a decade opportunity to make a killing from smallcap rebound.

Finally, Is the Share Price of Yes Bank Ready for a Rebound? (The 5 Minute Wrapup)

Oct 7, 2019

Here's what every individual investor must know about Yes Bank...

Two Stocks to Buy in the Great Indian Festival (Profit Hunter)

Oct 11, 2019

Discounts are not just limited to E-tailers. You can buy stocks at 50% off too. Here are two stocks to buy now.

The One Stock I Like in this Market (The 5 Minute Wrapup)

Oct 10, 2019

There are rare periods in markets when you get good quality stocks at attractive valuations. Is this one such period?

5 Smart Money Stocks to Profit from the Market Rebound (The 5 Minute Wrapup)

Oct 11, 2019

Now is the time to put money in these 5 stocks to take advantage of the recovery in the economy and the markets.

More

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2020
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS