Created as a new category under the non-banking finance companies a few months back, IFCs can now raise external commercial borrowings (ECBs) up to 50 per cent of their owned funds automatically. So far, they could do so only under the approval route.
"As a measure of liberalisation of the existing procedures, it has been decided to permit IFCs to avail of ECBs, including outstanding ECBs, up to 50 per cent of their owned funds under the automatic route," the central bank said in a statement.
The RBI move assumes importance as the country aims to double its infrastructure spending to $1 trillion (Rs 45 lakh crore) during the 12th Plan (2012-17) period from the current Plan level. The apex bank said, however, ECBs beyond the half the size of their funds will require its approval.
Besides, a single company can raise only $500 million in a financial year through the automatic route, as is the current practice. Similarly, average maturity period, prepayment, refinancing of existing ECBs and reporting arrangements will remain the same, the RBI statement added.
The infrastructure sector includes power, telecom, railways, roads/bridges, sea ports and airports, industrial parks, urban infrastructure (water supply, sanitation and sewage projects), mining, exploration and refining. In March, the central bank had also allowed companies setting up cold-storage facilities to raise funds abroad, thereby giving such projects infrastructure status.
Under the present ECB norms, funds can be raised in overseas market at a maximum rate of global benchmark interest rate - Libor - plus 200bps if loan is for three years, up to 300bps if debt is up to five years and 500bps if it is above five years.