Remove limits on overseas borrowings by corporates, recommends Sahoo panel

The country should remove the limits on corporates' external commercial borrowings, according to recommendations of a committee which submitted its report to the government on Friday, television channels reported.

The committee headed by MS Sahoo, a former member of the Securities and Exchange Board of India (Sebi), was given the task to review the rules on external commercial borrowings (ECBs).

The Sahoo panel was  also in favour of removing end-use restrictions, and recommended that every borrower should hedge a part of their borrowing, according to the television channels.

Currently the limit for each domestic company to raise funds through ECBs stands at US $750 million in a financial year barring in segments such as hotel, hospital and software sectors.

Firms also have to limit their borrowing cost at 350 basis points over six-month LIBOR for three to five year maturity and at 500 basis points over LIBOR for more than five years, according to the Reserve Bank of India.

(Reuters)