Remove limits on companies’ overseas borrowings: Sahoo panel

The Finance Ministry has invited views/comments on the Sahoo Committee report on foreign currency borrowings.

The views/comments may be submitted to the Finance Ministry by May 10, said a communique issued by the Department of Economic Affairs in the Finance Ministry.

The Finance Ministry has also today made public this report, which is the third in the series submitted by the Sahoo Panel.

Reuters reports : India 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 Indian market regulator, was given the task to review the rules on external commercial borrowings.

The 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 Indian company to raise funds through ECB is $750 million in a financial year barring in segments such as hotel, hospital and software sectors.

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