Indian companies have raised more than $1.58 billion from overseas markets in November compared to $2.47 billion in October through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs). Around 75 companies have raised about $1.33 billion for a range of projects through the automatic route in November, which does not require any approval from the Reserve Bank of India (RBI) or the government.
According to the RBI data, another $253 million was raised through the approval route. Public sector ONGC Mangalore Petrochem raised $250 million through ECBs for its new projects. Tata Teleservices raised $200 million for import of capital goods through ECBs. Similarly, Infrastructure Development Finance Company raised $100 million for onward or sub-lending.
Under the approval route in November, Dredging Corporation of India raised over $158 million through ECBs for its port project. Other key fund raisers in November included OCL Iron and Steel, which raised $95 million for its rupee expenditure.
Earlier, companies, registered under the Companies Act, 1956, were allowed to access ECBs up to $500 million in a fiscal year under the automatic route. However, in September, the government raised the limit of external borrowings with tenure of 5 years or more under the automatic route to $750 million. Further, for the services sector, the ECB limit under the automatic route was increased to $200 million and for NGOs from $5 million to $10 million.
Moreover, the ECB, which is not covered by the automatic route, is considered under the approval route on a case-by-case basis by the RBI. FCCBs are also governed by norms related to ECBs. External borrowings are being permitted by the Government for providing an additional source of funds to Indian corporates and PSUs for financing expansion of existing capacity and as well as for fresh investment, to augment the resources available domestically. ECBs can be used for any purpose (rupee-related expenditure as well as imports) except for investment in stock market and speculation in real estate.
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