RBI extends all-in-cost ceiling for external commercial borrowings till March end

MUMBAI: The Reserve Bank today extended the all-in-cost ceiling for external commercial borrowings to March-end, 2015.

"On a review, it has been decided that the all-in-cost ceiling...will continue to be applicable till March 31, 2015 and is subject to review thereafter," the Reserve Bank of India ( RBI) said in a notification.

The all-in-cost ceiling for ECBs with average maturity of three and up to five years is at 6 months London interbank offer rate ( Libor) plus 350 basis points (3.5 per cent).

For ECB of more than five years, it is 6 months Libor plus 500 basis points (5 per cent).

The all-in-cost ceiling limit had expired in December. The ceilings have been extended time to time since 2011 considering the global financial markets situation.

The all-in cost involves every cost in a financial transaction. It can be used to explain the total fees and interest included in a financial transaction such as a loan.

By comparing all-in costs, investors and borrowers can more easily compare net gain potential.

Also, in a separate notification, RBI extended the all-in-cost ceiling regarding trade credits for imports into India till March 31, 2015.

The ceilings for trade credits for imports for a maturity period from one year to five year is 6 months Libor plus 350 basis points.