The Finance Ministry, on Friday, relaxed the policy norms for external commercial borrowings (ECBs) to facilitate easy availability of cheap funds for the upcoming 2G spectrum auction, keeping in view the large capital outlay required to be paid directly to the government within a limited period of time.
According to an official statement here, successful bidders in the 2G auction will be eligible to refinance their rupee loans availed of from domestic lenders for making the upfront payment with a long-term ECB, under the ‘automatic route’, subject to certain conditions.
Also, subject to certain terms and conditions, the successful bidders can also avail themselves of short-term foreign currency loan in the nature of bridge finance under the ‘automatic route’ for the purpose of making upfront payment towards 2G spectrum allocation and replace the same with a long-term ECB under the ‘automatic route’.
“Successful bidders will also be allowed to avail themselves of ECB from their ultimate parent company without any maximum ECB liability-equity ratio under the ‘automatic route’, subject to certain conditions,” the statement said. The Reserve Bank of India (RBI) is expected to issue relevant circular giving effect to the aforesaid liberalisation measures in ECB policy within a week.
The government takes up the ECB policy for periodic review consultation with the RBI, keeping in view the evolving macro-economic situation, external sector assessment, needs of the corporate sector and other sectoral requirements.
Under the existing policy, eligible borrowers in the telecommunication sector are permitted to avail themselves of ECB under the automatic route for the purpose of spectrum allocation payment. To develop the telecom sector in the country, the government, in January 2010, had provided a window of 12 months to successful bidders of 3G auction to refinance the rupee loans initially availed of from domestic lenders to make payment for spectrum allocation with a long-term ECB under the approval route.