$126.29 bn already raised against $160 bn permitted
MUMBAI: The Reserve Bank of India (RBI) has capped the stock of external commercial borrowings (ECB) of the country at 6.5 per cent of the GDP.
Based on the GDP figures at current prices as on March 31, 2018, at $2.46 trillion, the soft limit for the current financial year works out to $160 billion. Given that the outstanding stock of ECB as on September 30, 2018 stood at $126.29 billion, the additional ECB that can be raised during the current year is estimated to be less than $34 billion.
RBI in a statement said the decision has been taken in consultation with the Government of India to have a rule-based dynamic limit for outstanding stock of External Commercial Borrowings.
External Commercial Borrowings (ECBs) include bank loans, suppliers’ and buyers’ credits, fixed and floating rate bonds (without convertibility) and borrowings from private sector windows of multilateral Financial Institutions such as International Finance Corporation (IFC).
ECB fund raising is being permitted by the Government for providing an additional source of funds to Indian corporates and PSUs to help finance their expansion of existing capacity and as well as for fresh investments, to boost financial 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