RBI has vide two notifications both dated 20th april 2012 further liberalised the ECB regime.
In the first notification, which can be accessed here the infrastructure sector has been given the sops. Power sector is allowed to use 40% of the ECB loan availed for refinancing costly rupee loan, but this will be on approval basis and also subject to the condition that the balance 60% is to be used for capital expenditure.
In the second notification which can be accessed here a new ECB can be raised at a higher rate than the existing ECB and that second ECB can be used for refinancing/ rescheduling an existing ECB on approval basis. The all in cost ceilings should not be broached.
I wonder why should anybody borrow at a higher rate in order to reschedule a ECB taken at a lower rate, unless I am missing something.
In the first notification, which can be accessed here the infrastructure sector has been given the sops. Power sector is allowed to use 40% of the ECB loan availed for refinancing costly rupee loan, but this will be on approval basis and also subject to the condition that the balance 60% is to be used for capital expenditure.
In the second notification which can be accessed here a new ECB can be raised at a higher rate than the existing ECB and that second ECB can be used for refinancing/ rescheduling an existing ECB on approval basis. The all in cost ceilings should not be broached.
I wonder why should anybody borrow at a higher rate in order to reschedule a ECB taken at a lower rate, unless I am missing something.
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