Reliance Industries' plans to raise $500 million from overseas markets may suffer a setback after the government decided to "discourage" all external commercial borrowings above $100 million.
"As a matter of principle, the government has decided to discourage ECBs above $100 million," joint secretary (capital markets) U K Sinha said, when asked if the finance ministry had blocked RIL's foreign loan proposal.
Many companies like RIL and ICICI had plans to raise cheaper funds from abroad for various purposes including expansion and debt restructuring.
Indications are that ICICI's proposal to raise $300 million might get finance ministry's nod as it was meant for revamping ailing steel companies.
RIL chairman Mukesh Ambani who met Finance Minister Jaswant Singh on Monday said, "I am not aware of it. If something develops, we will let you know through our official spokesperson."
The company is also believed to have sought extension of its previous $750 million ECB from five to 10 years.
Government was not in favour of allowing ECBs above $100 million as it wanted companies to borrow from the domestic market, which is flushed with funds.
Moreover, the interest rate of six per cent was the lowest.