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RBI hikes ECB limits by $10 billion | In an endeavor to check the rupee slide and improve markets, the Reserve Bank of India (RBI) today hiked the limit of external commercial debt by $10 billion. It has been decided to allow Indian companies in manufacturing and infrastructure sector and having foreign exchange earnings to avail of external commercial borrowing (ECB) for repayment of outstanding Rupee loans towards capital expenditure and/or fresh Rupee capital expenditure under the approval route. The overall ceiling for such
ECBs would be USD 10 billion. The existing limit for investment by Securities
and Exchange Board of India (SEBI) registered foreign institutional investors
(FIIs) in Government securities (G-Secs) has been enhanced by a further amount
of USD 5 billion. This would take the overall limit for FII investment in G-Secs
from USD 15 billion to USD 20 billion. In order to broad base the non-resident
investor base for G-Secs, it has also been decided to allow long term investors
like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance
funds, pension funds and foreign central banks to be registered with SEBI, to
also invest in G-Secs for the entire limit of USD 20 billion. The sub-limit of
USD 10 billion (existing USD 5 billion with residual maturity of 5 years and additional
limit of USD 5 billion) would have the residual maturity of three years. The terms
and conditions for the scheme for FII investment in infrastructure debt and the
scheme for non-resident investment in Infrastructure Development Funds (IDFs)
have been further rationalised in terms of lock-in period and residual maturity.
Further, Qualified Foreign Investors (QFIs) can now invest in those mutual fund
(MF) schemes that hold at least 25 percent of their assets (either in debt or
in equity or both) in infrastructure sector under the current USD 3 billion sub-limit
for investment in mutual funds related to infrastructure. Finance Minister Pranab
Mukherjee earlier today said his ministry and the Reserve Bank of India (RBI)
would soon announce certain steps. "I think the notifications are going to be
issued. In the morning, I discussed with Secretary, Economic Affairs... the Reserve
Bank is going to issue the circular as..... He had a discussion with Deputy Governor
Subir Gokarn. So, they will announce and let us wait for that," he told media
here. |
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