The Reserve Bank of India (RBI) on October 1 proposed revised External Commercial Borrowings (ECB) in order to rationalize and simplify the governing regulations.
The RBI said based on the review, a revised framework that provides for expansion of eligible borrower and recognized lender base, rationalization of borrowing limits, rationalization of restrictions on average maturity period, removal of restrictions on the cost of borrowing for ECBs, review of end-use restrictions and simplification of reporting requirements, is proposed to be introduced.
“Key provisions relating to eligible borrowers, recognised lenders, limits on borrowing, cost of borrowing, end-use and reporting, etc. in ECB regulations, issued under FEMA, are proposed to be rationalized,” RBI Governor Sanjay Malhotra said during monetary policy announcement.
The central bank will issue draft framework shortly, governor said.
The RBI’s Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 5.5 percent on October 1, second time in a row.
The MPC also kept the stance unchanged to 'Neutral'.
The MPC considered it prudent to wait for impact of policy actions to play our before charting the next policy action.
As a result, the standing deposit facility (SDF) rate remains unchanged at 5.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent.
The decision was in line with Moneycontrol’s poll of economists and bankers who predicted the RBI’s Monetary Policy Committee (MPC) will hold rates due to comfort from the higher growth in the first quarter while taking time to assess the data on the Goods and Services Tax (GST) reforms.
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