Telcos? 2G upfront payment can help get long-term ECB

The Reserve Bank of India on Monday said the telecom companies making upfront payments towards 2G spectrum out of rupee loans can avail of long-term external commercial borrowings to refinance such loans under the automatic route and also avail bridge loans.

Written by FE News Desk

November 27, 2012 00:34 IST

However, RBI said such long-term forex loans must be taken within 18 months from the date of the sanction of rupee loan. The borrower must also provide bank with proof of the upfront payment against spectrum allocated. ?The successful bidders in the 2G auction will be allowed to avail of ECB under the ?automatic route? from their ultimate parent company without any maximum ECB liability-equity ratio subject to the condition that the lender holds minimum paid-up equity of 25% in the borrower company, either directly or indirectly,” RBI said.

These relaxations are part of a special dispensation scheme that will be available to companies that will be successful in getting 2G spectrum through the upcoming auction. Other norms governing forex loans will be applicable to such loans as well, the central bank added.

Recently, the government auctioned spectrum that attracted muted response from the market and fetched only R9,407 crore out of R28,000 crore.

This article was first uploaded on November twenty-seven, twenty twelve, at thirty-four minutes past twelve in the am.