Regulations
RBI relaxes ECB norms for infrastructure companies

The central bank allowed companies engaged in infrastructure sector to raise bridge finance from overseas market under the automatic route

 
Mumbai: Giving a boost to infrastructure sector funding, the Reserve Bank of India (RBI) has relaxed the external commercial borrowings (ECB) norms to help companies raise more funds from overseas markets, reports PTI.
 
The RBI has allowed companies engaged in infrastructure sector to raise bridge finance from overseas market under the automatic route.
 
"On a review, it has been decided to allow refinancing of such bridge finance (if in the nature of buyers'/suppliers' credit) availed of, with an ECB under the automatic route," the central bank said in a notification.
 
Under the earlier provision, the companies were required to take permission of the RBI for raising bridge finance, which is a kind of interim arrangement for short-term credit.
 
The Reserve bank through a separate notification, has also allowed companies in infrastructure sector to raise ECB up to a maximum period of five years for importing capital goods.
 
Under the new norms, the trade credit should not be for a period of less than 15 months and also not in the nature of short-term rollover finance.
 
Earlier, the companies could raise ECBs for a period ranging from one year to three years.
 
The RBI notification further said that the all-inclusive costs, which include arranger fee, upfront fee, management fee among others, of such borrowing should not be over 3.5% of six months Libor.
 
The credit facility would be available up to $20 million per transaction for import of capital goods as classified by the Directorate General of Foreign Trade (DGFT).
 
The Reserve Bank has also relaxed the ECB norms for repayment of Rupee loans within the overall ceiling of $20 billion.
 
As per the RBI notification, the permissible limit of ECB has been increased from 50% to 75% of the average foreign exchange earnings realised during the past three financial years or 50% of the highest forex earning in a year.
 
The limit of maximum ECB which can be availed by an individual or group company under the scheme has been pegged at $3 billion.
 
Earlier the maximum permissible ECB under the scheme was limited to 50% of the average annual export earnings realised during the past three financial years.
 

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Deposit proceeds from Deccan Chargers’ sale in ICICI bank, says HC

The High Court while hearing an application filed by Tata Capital against Deccan Chronicle Holdings, said sale proceeds from the auction of IPL team franchise Deccan Chargers should be deposited with ICICI bank after paying 5% to BCCI

 
Mumbai: The Bombay High Court has directed that proceeds of the sale of Indian Premier League (IPL) team Deccan Chargers be deposited with the ICICI bank after paying 5% to Board Of Control For Cricket In India (BCCI), reports PTI.
 
The order was passed by Justice SJ Kathawalla while hearing an application filed by Tata Capital against Deccan Chronicle Holdings Ltd (DCHL), owners of Deccan Chargers, for recovery of a Rs101 crore loan.
 
Counsels Janak Dwarkadas and Ashok Paranjpe, appearing for Tata Capital, argued that there should be transparency in the bidding process.
 
"BCCI has claim of only 5% of the sales proceeds. The remaining amount is available for creditors of Deccan Chronicles," they argued.
 
After accepting their contention, Justice Kathawalla directed that the sale proceeds to be deposited with ICICI bank after paying 5% to BCCI. The auction is to be opened on 13th September in Chennai.
 
"The auction is directed to be conducted under the supervision of MD Narvekar, official assignee of the High Court. The sales proceeds received from the sale of the IPL team known as Deccan Chargers shall be deposited with the ICICI bank after paying 5% to BCCI. The amount deposited with the ICICI bank shall not be disbursed or appropriated without permission of this court," Justice Kathawalla ordered.
 
The matter has been posted for further hearing on 17th September.
 
Tata Capital had moved the application today in an arbitration petition filed by them against DCHL for recovery of their loan amount of Rs101 crore.
 
According to the petition, a term loan had been sanctioned by Tata Finance to DCHL which it allegedly defaulted in repaying. A notice was served and it promised to repay the loan within the specified period.
 

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Union Bank cuts rates for loans to medium and small sector by 0.75%

Union Bank's cut in interest rates for medium and small loans of over Rs1 crore would be applicable from 10th September

 
Kolkata: State-run United Bank of India (UBI) has cut interest rates by 0.75% to 2.75% on medium and small loans above Rs1 crore, reports PTI.
 
The rates will be effective from 10th September, the city-based bank said in a statement.
 
UBI had already reduced the interest rates for the sector for loans below Rs1 crore by 0.50% to 4% with effect from 15 August 2012, it added.
 

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