In a major boost to housing finance in the country, the government as simplified the external commercial borrowing (ECB) guidelines helping home finance companies and port operators in India and increased the prospects of a fresh round of overseas borrowings. In a notification, the Reserve Bank of India recently made all-in-cost ceiling for ECBs uniform at 450 basis points over the benchmark London Interbank Offer Rate (LIBOR) and done away with different slabs for different maturities. Under the simplified norm hundred basis points make 1 percentage point. This notification continues liberalizing the ECB framework, recognizing that companies require increased flexibility and access to various types of financing, including offshore financing, said head of global finance at Barclays India, Arun Saigal. The newest changes come amid an increase in overseas borrowing rates for Indian companies after a rise in the benchmark 10-year US bond in 2018. Similarly, companies in the maintenance, repair and overhaul in the freight forwarding sector have also been allowed to borrow foreign funds through the masala route — rupee denominated bonds issued in overseas markets. For housing finance companies, this makes access to foreign funds simpler and they no longer have to wait for the RBI approval with the caveat that our currency risk is fully hedged, executive director at mortgage lender HDFC, V Srinivasa Rangan, said.
📅Published on:
30 April 2018
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