The Hindu Business Line : India Inc raised $15 b via ECB in 5 months

Mumbai, Aug. 24 Indian companies have borrowed about $14.97 billion through external commercial borrowing (ECB) and foreign currency convertible bonds (FCCB) within a span of five months from January to May 2007.

Analysts feel that the huge borrowing through ECB route was mainly due to the high rates of interest in the domestic market. “The interest rates for borrowing through ECB/FCCB was about two-three per cent lower than that offered by the domestic market,” said a banking analyst. The month of March saw the highest borrowing at $5.09 billion while the borrowings in April and May together stood at $5.74 billion.

Decline expected

Analysts, however, feel that the borrowings through ECB would see a sharp decline with the recent revision in ECB guidelines by RBI. The recent guidelines on ECB state that companies borrowing more than $20 million per financial year through the ECB route will not be allowed to remit the funds into India except under specific approval.

“Companies looking for overseas borrowing will now have to comply with a number of regulatory issues,” said an analyst.

The Reserve Bank of India has released data on ECB and FCCB — both automatic and approval route — for April and May 2007.

In the month of April, Reliance Communications Ltd., has borrowed $500 million (maturity period of five years and eleven months), which is the highest through ECB (automatic route), for technical assistance, telecom, import of capital goods and rupee expenditure.

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