Relaxed ECB norms for MSME sector: FinMin

The finance ministry has decided to ease off the norms for raising external commercial borrowing (ECB) by domestic firms in MSME and realty sector.

Though the committee on ECB decided to keep the overall window for ECBs at the current amount of $40 billion but it let cash-deprived MSME and realty sector to access such funds. The committee also liberalised the refinancing norms for infrastructure and manufacturing firms.

ECBs draw more attention than domestic borrowings because the cost of raising the loan is lower in the former one. Also, it provides an additional avenue to get large amount of funds from other foreign markets.

The committee also directed refinancing of buyer’s credit for import of capital goods used in core sector project through automatic approval route while increasing the maturity period to maximum five years for such loans.

This would no longer require such companies to take clearance from RBI and would also get a longer period to repay the debt raised from foreign markets.