The Reserve Bank of India has tweaked the external commercial borrowing (ECB) rules for telecom companies to enable them garner funds to pay for the 2G spectrum allocation.

Relaxing its external commercial borrowing (ECB) policy for the telecom companies, the central bank said that successful bidders at the 2Gspectrum auction would be permitted to refinance the rupee loans taken for making the payment for the spectrum by raising long-term ECBs.

Telecom companies will be permitted to avail ECBs from their parent companies without any maximum ECB liability-equity ratio. However, the relaxation will be subject to the condition that the lending company owns minimum paid-up equity of 25% in the borrower firm. In addition, the bidders will also be allowed to take short-term loans from foreign companies for making upfront payment for the 2G spectrum and replace the short-term loans with a long-term ECB.

However, the central bank also made it clear that the ECBs would have to be raised within eighteen months of the sanction of the rupee loan.

The bank also declared that the relaxations in respect of the ECBs would applicable only to the winning bidders in the forthcoming 2G spectrum auction.

The RBI said in a statement, "The relaxations in respect of the ECB liability-equity ratio. refinancing of Rupee loans and bridge finance are part of a special dispensation applicable only to the successful bidders in the upcoming 2G spectrum auction."

The deadline for making payments for the 2G spectrum is December 1, 2012.