The Reserve Bank of India through a circular dated December 9, 2009 has modified some aspects of the External Commercial Borrowings (ECB) with effect from January 1, 2010. The modifications come in the wake of improvement in conditions of international financial markets and narrowing of spreads.

According to the new norms Indian companies would be allowed to raise debt for three to five years by paying up to 300 basis points above the London Inter-bank Offered Rate(LIBOR).For those companies using the ECB route to raise funds for over five years they would be allowed to pay up to 500 basis points over Libor.

The special window for the buyback of Foreign Currency Convertible Bonds (FCCBs) would discontinue from January 1, 2010.

In case of Corporates engaged in the development of integrated township they can continue to avail of  ECB until December 31,2010  under the approval route.

For those Non Banking Finance Companies exclusively involved in the financing of the infrastructure sector, the Central Bank has decided with immediate effect to allow such NBFCs to avail of ECB from the recognized lender category including international banks under the approval route subject to complying with the prudential standards prescribed by the RBI.

However in case of the telecom sector the RBI had allowed the operators to use the ECB route to obtain 3G licenses. Now, they have been permitted to use the route for payment of spectrum allocation also.