RBI liberalises ECB norms by relaxing end-use restrictions:
Reserve Bank of India (RBI) has relaxed External Commercial Borrowing (ECB) norms for corporates, non-banking lenders by relaxing end-use restrictions with regard to working capital, general corporate purpose and repayment of rupee loans. This decision was taken after receiving feedback from stakeholders for easing liquidity in the domestic market.
Recent changes by RBI
End-use stipulations for ECBs for both corporates as well as liquidity starved non-banking lenders has been liberalised.
Liberalisation will be applicable to ECBs taken for general corporate purpose loans, working capital or repayment of rupee loans.
It allows eligible borrowers to raise ECBs from recognised lenders, except foreign branches and overseas subsidiaries of Indian banks, with minimum average maturity period of ten years for working capital purposes and general corporate purposes.
It also allows ECBs to raise with minimum average maturity period of 7 years for repayment of rupee loans availed domestically for capital expenditure.
It also permits borrowing for on-lending by NBFCs for above maturity and end-uses. It also permits borrowings for on-lending by NBFCs for repayment of rupee loans.
It also allows corporate borrowers to avail ECBs for repaying rupee loans taken for Capital expenditures if they are into infrastructure building/ manufacturing and classified as Special Mention Account (SMA-2) or Non-Performing Asset (NPA), under any one-time settlement arrangement with lenders.
About External Commercial Borrowing (ECB):
It is instrument used in India to facilitate Indian companies to raise money outside the country in foreign currency. It may be commercial loans which can be in form of bank loans, bonds, securitized instruments, buyers’ and supplier’s credit availed from non-resident lenders with minimum average maturity of 3 years. In India, ECBs availed of by residents are governed by Foreign Exchange Management Act (FEMA), 1999 along with Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, as amended from time to time.
Reliance Jio overtakes Vodafone-Idea network and became India`s Largest Telecom Operator:
Reliance Jio overtook Vodafone-Idea to become India`s leading telecom operator. While the monthly subscriber report from the Telecom Regulatory Authority of India (TRAI).The news comes from data collated off the quarterly financial reports furnished by Bharti Airtel, Reliance Jio and Vodafone-Idea, India`s three leading telecom operators. Bharti Airtel disclosed through TRAI its user base of 320.4 million users while enduring a rough quarter of high subscriber churn rate (subscribers unsubscribing from the network against new subscriptions). Jio`s recently disclosed Q1 FY20 financial report showed 331.3 million subscribers in its network.
Vodafone-Idea`s financial report for the same quarter, it has come to light that the operator group lost 14.1 million in Q1 FY20, declining from the industry-topping 334.1 million subscribers as of March 2019, to stand at 320 million subscribers.
Vodafone-Idea:
Vodafone-Idea attributed the loss of subscribers to its recently introduced service validity vouchers and the minimum recharge plans.The main aim is to reveal customers and consolidate its burgeoning losses.
When the Vodafone-Idea merger finalised on August 31, 2018. The subscriber group had a total of nearly 400 million subscribers and took the undisputed position of India`s number one telecom operator by market share and user base. The user base declined consistently every month in a rate that was directly proportional to Jio`s increase in subscriber base.TRAI`s data over the past one year does not show any notion of a slowdown in Jio`s subscriber base, and with the expected 5G spectrum battle on the horizon, Vodafone-Idea and Bharti Airtel will look to salvage some of their declining market shares through effective business strategies.