RBI eases ECB norms, lifts sectoral limits

RBI has drawn up a new ECB framework allowing all eligible borrowers to raise up to $750 million per financial year under the automatic route, replacing the existing sector-wise limits. The central bank has also expanded the list of eligible borrowers and recognised lenders. To curb volatility in the foreign exchange market arising out of dollar demand for crude oil purchases, the framework provides a special dispensation to public sector oil marketing companies. It allows them to raise ECBs, with an overall ceiling of $10 billion, for working capital purposes with a minimum average maturity period of three years under the automatic route without mandatory hedging and individual limit requirements. The list of borrowers has been expanded to include all entities eligible to receive foreign direct investment.