New External Commercial Borrowing(ECB) norms

1) Indian firms have been allowed to borrow up to $1 billion in yuan through ECB under the approval route. The overall limit is $30 billion. Till now, India only allowed overseas borrowing in US dollar, euro, Japanese yen and British pounds.

2) The government also decided to increase the ECB limit for automatic route (without RBI approval) from the current $500 million to $750 million across sectors.

3) The limit for the service sector via automatic route has been increased to $200 million from the current $100 million while the limit for NGOs has been increased to $10 million from the current $5 million.

4) The government also allowed firms to refinance their rupee debt of all maturities through 25% of overseas borrowing. However, 75 per cent of the new funds raised will have to be invested for financing a new project .
The move will help Indian firms in raising cheaper funds from abroad. The relaxation in ECB norms is also likely to help stop the fall in the value of rupee, currently at Rs 47.55 against US dollar.

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