RBI’s Move to Modify the ECB Guidelines

India Inc cautiously welcomed the RBI”s move to modify the ECB guidelines and said this also indicates a gradual withdrawal of stimulus measures announced to help the industry tide over the global crisis.

However, Ficci said that the RBI”s step may make availability of funds through ECB route more expensive while the ECB route is frequently used by SMEs for raising funds, which are even otherwise available at a high price from the domestic banking system.

Meanwhile, it also said that the relaxation of certain ECB norms given by the RBI during the liquidity crisis period to India Inc have been gradually withdrawn that is an indicator of a gradual withdrawal of the stimulus package.

Further, CII said that RBI”s steps are an indication of slowly unwinding of the liquidity enhancing measures while these measures should not be seen as a precursor to monetary tightening through a rate hike.

On the other hand, the chamber welcomed the central bank”s decision to allow NBFCs exclusively involved in financing infrastructure projects to avail of ECBs.

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