Overseas debt norms relaxed for infrastructure firms

NEW DELHI: India has eased overseas debt norms for infrastructure firms allowing oil marketing companies to finance short-term credit through external commercial borrowings but kept the overall limit unchanged for the fiscal.

"The RBI has allowed oil marketing companies to finance part of their short-term trade credit requirement through overseas debt," said RBI deputy governor HR Khan, while briefing reporters after a meeting of the high-level committee on external commercial borrowing (ECBs) chaired by department of economic affairs secretary Arvind Mayaram. The panel kept the overall limit unchanged, he added.

The panel also extended the ECB relaxation for affordable hoursing for two years and aviation for a few more months. In December last year, the RBI had allowed real estate developers and housing finance companies to raise up to $1 billion through ECBs in the last fiscal to promote low-cost housing projects.

The funds raised through ECBs could be used either for developing low-cost housing projects or for providing loans up to Rs 25 lakh to individuals for buying units with a price tag of Rs 30 lakh or less.

Housing finance companies (HFCs) National Housing Bank (NHB) can also raise ECBs for financing prospective owners of low cost, affordable housing units. The central bank will also come out with a uniform definition for infrastructure companies, he said. Telecom sevices have been included in the new harmonised list that already had telecom tower and netwrok services.

Foreign debt flows have become a big source of funds to bridge the wide current account gap that stood at 6.7% of GDP in the third quarter of 2012-13. Besides, with interest rates still remaining high, ECBs are considered a cheaper source of funding by corporates.