ECB norms for power companies eased
Central Govt has liberalized the ECB (External Commercial Borrowing) norms for power sector. The Power companies can now use up to 40% of loans to refinance their rupee debt but the rest 60% must be utilised for investments in new projects. Earlier, power companies were allowed to use only 25% of the ECB to refinance their domestic rupee-debt loan.
Objective: The policy decision will increase access to cheaper funds for companies in the power sector.
In another decision, the government has also opened the ECB route for capital expenditure on the maintenance and operations of toll systems in the roadways and highways sector provided these are part of the original project.
Objective: The policy decision will provide an added source of low-cost capital and encourage greater investment in road construction projects.RBI is likely to issue relevant notifications within 7 days giving effect to these decisions.