RBI relaxes ECB norms for the operators allowing them to raise funds from overseas

The Reserve Bank of India (RBI) has relaxed norms to allow operators to raise long-term funds from overseas to refinance their domestic loans. These domestic loans include the ones being taken to pay fee for the 2G spectrum won by them in the recently concluded 2G spectrum auction.

According to RBI notification, the successful bidders making upfront payment for the  spectrum through Rupee loans availed from the domestic lenders, would be eligible to refinance these loans with a long-term external commercial borrowing (ECB), under the automatic route.

The notification further states that successful bidders in the 2G spectrum auction will be allowed to avail of ECB under the automatic route from their ultimate parent company without any maximum ECB liability-equity ratio. However, the ECB can be availed of from the parent company, if the lender holds minimum paid-up equity of 25 per cent in the borrower company, either directly or indirectly.

Also, the winners of 2G spectrum can avail of short term foreign currency loan in the nature of bridge finance under the automatic route for making upfront payment towards 2G spectrum allocation and replace the same with a long term ECB under the automatic route.