Mumbai, Sept. 23: The Reserve Bank of India (RBI) has included entities such as pension funds, sovereign wealth funds and other long term investors in the list of lenders offering loans to corporate houses and others.

These changes have been suggested by the central bank as part of its draft framework on external commercial borrowings (ECBs).

ECBs, which supplement domestic capital, are commercial loans in the form of bank loans, instruments (floating rate notes, fixed rate bonds and others), buyers credit, suppliers credit taken from non-resident lenders.

According to the proposed ECB framework, the central bank expanded the list of recognised lenders to include entities having long term interests in India.

At present, corporate houses can raise ECBs from international banks, international capital markets, multilateral financial institutions, export credit agencies, suppliers of equipment and foreign collaborators, among others.

While the expansion of the list of lenders will give more options to the domestic borrower, there was, however, a disappointment when the RBI proposed to reduce the all-in cost ceiling by 50 basis points for normal ECBs. However, for long-term borrowings, the all-in cost will be higher by the same margin.

At present, the all-in-cost ceiling, which includes rate of interest, other fees and expenses in foreign currency, is 350 basis points for borrowings of three years and up to five years and 500 basis points for borrowings of over five years.