RBI To Induce Overseas Borrowings in 2G Spectrum Outlook

Bangalore: India’s cell phone airwaves auction now can easily raise money to pay the cash-depleted government, as the overseas borrowing regulations for capable bidders has been induced by The Reserve Bank of India (RBI).

The RBI earlier this month had said that the winning bidders, without seeking approval from the regulators, would be able to use any short-term foreign currency as bridge finance. Furthermore, those bidders would be able to replace those short-term borrowings with long-term external or overseas commercial borrowings (ECB), provided from the drawdown of the bridge finance, the ECB should be raised with a period of 18 months, as reported by NDTV.

However, if a parent company were to own a minimum of 25 percent of the equity shares of the local company, the mobile operators would be able to borrow from their parent companies, without any limit, the RBI added.

The Reserve Bank of India has said that the successful bidders, who make the upfront payments for the spectrum via any sort of rupee loans, wouldn’t have to seek any regulatory approval and could refinance the payments with a longer term ECBs.