In a late night notification the central banker said, "It has been decided to increase the ECB Liability to Equity Ratio for ECB raised from direct foreign equity holder under the automatic route to 7:1. This ratio will not be applicable if total of all ECBs raised by an entity is up to USD 5 million or equivalent". This has been done to enable cheaper access of funds to other sectors through the External Commercial Borrowing facility.
It is been decided to charge an uniform all-in-cost ceiling of 450 basis points over the benchmark rate for balancing the provisions of foreign currency and rupee ECBs as well as rupee denominated bonds. The notification said, "The benchmark rate will be 6 month USD LIBOR (or applicable benchmark for respective currency) for Track I and Track II, while it will be prevailing yield of the Government of India securities of corresponding maturity for Track III (Rupee ECBs) and RDBs".
Also, as per the policy all of the HFCs as well as port trust can make use of ECBs under all tracks. But prior to it all the entities need to have an approved risk management policy in place and should keep their ECB exposure hedged 100 per cent at all times for ECBs raised, it said.
Additionally, the investments raised via ECBs cannot be used for buying land or dealing in real estate except for SEZ development, affordable housing and integrated townships or industrial parks. Also, there are restrictions of its usage towards equity investment and share market.