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ECB guidelines liberalised further

New Delhi, Sept. 15 (PTI): Further liberalising external commercial borrowing guidelines, the government today allowed companies to raise up to $ 50 million under the automatic route, fixed an annual cap of $ 500 million for certain units in special economic zones and removed restrictions of end-use for proceeds for investment in the real estate sector.

Giving details of the modified ECB guidelines, the government said pre-payment of ECBs, delegated to the Reserve Bank of India, would be permitted without any limit and minus any of the existing conditions. The window for prepayment would be effective up to March 31, 2003.

The decision to make the modifications in ECB guidelines was taken considering changes in external financial markets, requirements of companies and with a view to liberalise further the ECB approvals, an official release here said.

Under the changed guidelines, applicants would be free to raise ECBs from any internationally recognised source such as banks, export credit agencies, suppliers of equipment, foreign collaborators, foreign equity holders and international capital markets.

Offers from unrecognised sources would not be entertained and this would also be applicable for ECBs below $ 5 million, the release said. The prepayment mechanism would also be subject to review keeping in view the market conditions and the RBI would issue necessary press note incorporating the revised prepayment guidelines.

On deletion of end-use restrictions in real estate investments, it said the government has decided to drop restrictions of end-use for ECB proceeds for investment in this sector.

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