The government on Wednesday tightened external commercial borrowing norms in the wake of softer interest regime and burgeoning foreign exchange reserves, now at over $92 billion.
A notification issued on Wednesday said the maximum spread on ECBs raised for normal projects has been halved to Libor plus 1.5 per cent from the present Libor plus 3 per cent.
This means that corporates can raise ECBs only at lower rates. Only "AAA" rated and financially sound corporates can raise ECBs now over $100 million, analysts said.
In the case of infrastructure projects, the government has capped the maximum spread on ECBs at Libor plus 2.5 per cent from the present Libor plus 4 per cent.
For other long term projects, the maximum spread has been reduced to Libor plus 3 per cent from the present Libor plus 4.5 per cent.
The ECB guidelines of September 15, 2002, were revised today after a review meeting held recently.
Every three months, government reviews the norms taking into account the prevailing interest rates in India and abroad. But this revision has taken place after almost 14 months.