Lok Sabha Question No. 1146 (UNSTARRED), answered on 2019-02-08
Subject: Policy for Overseas Borrowings
Ministry: FINANCE
Asked by: ASADUDDIN OWAISI

## MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO. 1146

TO BE ANSWERED ON FEBRUARY 8,2019/MAGHA 19, 1940 (SAKA)

"Policy for Overseas Borrowings"

## to state: pleased

## 1146: SHRI ASADUDDIN OWAISI, MP. Will the Minister of FINANCE be

- a) whether the Reserve Bank of India (RBI) has recently notified new policy for overseas borrowing allowing all the eligible entities to raise foreign funds under automatic route removing sectoral curbs;
2. the extent to which this step of the RBI is likely to help improve ease of doing business; and;
- b) if so, the details thereof;
- d) the manner in which new policy is likely to remove earlier Tracks sectoral curbs to ease doing business?

## ANSWER

## MNNISTER OF STATE IN THE MINISTR Y OF FNNANCE

## '(SHRI: PON.RADHAKRISHNAN)

(a) & (b): Reserve Bank of India (RBI)  in consultation with the Government of India (Gol) January 16,2019 in this regard.

Under' the new policy all entities eligible to receive Foreign Direct Investment (FDI) are permitted to raise ECBs up to USD 750 million or equvalent per  financial year under automatic route  subject to certain terms and conditions   prescribed in replacing the system of sector wise limits The minimum average maturity (MAMP) has been kept at 3 years for all ECBs, irrespective of the: amount of borrowing in lieu of various layers of MAMPs as under the earlier framework; except the borrowers specifically period

- (c): The ECB Policy framework has been incrementally calibrated over time taking into account the emerging financing needs of Indian companies; especially critical requirements of infrastructure sector entities, macroeconomic developments and to promote ease of doing business; by permitting more  resident  entities as eligible  borrowers, recognizing more entities as lenders,  expanding end-uses and   rationalizing the all-in-cost   and minimum maturity requirements for such borrowings The recent changes that have been brought out in the ECB policy are a part of this continued effort are likely to help wider set of eligible borrowers i.e. corporates and other entities to avail ECBs to meet their capital needs with uniform minimum average maturity requirer:ents, uniform all-in-cost ceilings and small negative end-use list. and period

(d): Earlier Tracks I and Il of the ECB Policy Framework have been merged as "Foreign Currency Denominated ECB" and Track III and Rupee Denominated Bonds framework have been combined as "Rupee Denominated ECB" to replace the four-tiered structure  As per the new ECB framework; the list of eligible borrowers has been expanded to-include all entities eligible to receive FDI   Additionally, Port Trusts, Units in SEZ, SIDBL EXIM Bank, registered entities engaged in micro-finance activities, viz , Iegistered not for companies, registered societies/trusts/cooperatives and non-government organisations can also borrow under this framework; This expanded list of eligible borrowers will enable a wider set of Indian companies to raise ECBs up to USD 750 million O equivalent per financial year under the automatic route replacing the earlier system of sector wise limits. profit

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