Online BusinessRBI eases overseas borrowing for telcos
The Reserve Bank (RBI) has made it easy for telecom companies bidding for third generation (3G) mobile spectrum to borrow money from abroad, while tightening the norms for others.
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Ahead of the 3G spectrum auction, scheduled for January 14, the central bank in a notification yesterday that telcos can use the funds raised through external commercial borrowing (ECB) for buying airwaves to launch 3G telephony that offers faster data downloads.
Accessing the ECB route to raise money to participate in 3G spectrum auction has been the long-standing demand of telcom companies. They need big money to take part in the auction as the reserve price is fixed at Rs 3,500 crore.
The bank also re-imposed an all-inclusive interest ceiling for ECBs under the approval route of 300 basis points above London interbank offered rate-- the benchmark for global borrowings and lendings-- for loans with tenure of three to five years.
The all-inclusive ceiling for loans with a maturity of more than five years would be 500 basis points. Last year, RBI had done away with the ceiling to help companies tide over the global credit crunch.
Significantly, it has also decided to discontinue with the facility for buyback of foreign currency convertible bonds (FCCBs) by Indian companies with effect from January 1, 2010. "
"Keeping in view the prevailing macroeconomic conditions and global developments, especially the improvements in the stock prices, it has been decided to discontinue the facility with effect from January 1, 2010", the notification said.
The RBI said the new ECB norms for telecom sector will apply with immediate effect.
The central bank also extended the time real estate sector for raising overseas funds for developing integrated townships under the approval route. Now, the facility is extended to December 31 2010.
Non-Banking Finance Companies (NBFCs), exclusively involved in financing infrastructure projects, have been allowed to avail of ECBs from the recognised lender category including international banks under the approval route, with immediate effect.