Industry & Economy
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Exports & Imports
RBI raises EEFC limit to aid ECB prepayment
Our Bureau
NEW DELHI, March 27
THE Reserve Bank of India has allowed corporates and other exporters to credit well over 70 per cent of their foreign exchange earnings into Exchange Earner's Foreign Currency (EEFC) accounts, in a bid to enable them to prepay their external commercial borrowings (ECBs).
Under the current regulations, export-oriented units and other firms can credit up to 70 per cent and 50 per cent respectively of their foreign exchange earnings into their EEFC accounts. With interest rates being low, the RBI reckons that companies can now take advantage and prepay their ECBs.
The RBI has therefore allowed corporates and others now to credit a higher percentage of their forex earnings to their EEFC accounts on a case-by-case basis.
Some corporates have already taken advantage of the soft interest scenario abroad and prepaid their relative costlier foreign currency borrowings contracted a few years ago. A few corporates have also refinanced their earlier loans, replacing them with cheaper debt.
The move by corporates apart, the action on the prepayment front has been led by state-owned companies such as ONGC and NTPC, besides the Government which has prepaid some of its costlier loans taken from the World Bank at fixed rates. Loans taken from the World Bank by private entities such as the BSES on the back of a sovereign guarantee from the Government are also set to be prepaid shortly.
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