The government and the Reserve Bank of India (RBI) have relaxed norms of external commercial borrowings (ECBs). Now companies can arrange foreign funds for their projects in quite easily. The companies can now use dollar borrowings for rupee expenditures.

Indian companies are facing difficult times in raising funds from the international markets due to hard rules. The interest rates are much lower overseas and help Indian companies to get funds at much lower cost. The banks are also hesitating for funding the companies due to global financial turmoil.

The Apex Bank revised fund limit for external commercial borrowings (ECBs) up to $500 million per borrower per financial year. It was earlier $100 million per year. They are permitted to use the funds under automated route of rupee expenditure or foreign currency expenditure.

The current relaxation in ECB norms would increase foreign funds inflow in the Indian financial system. It would help to ease the liquidity problem in the market. However, it would take some time for foreign funds in India as foreign banks are still reluctant to fund companies amid tight global financial conditions.