The government and the Reserve Bank of India [Get Quote] are looking at easing external commercial borrowings guidelines and foreign direct investment norms to enhance overseas fund flows.

On ECBs, norms for which were eased earlier this year, a meeting on October 20 discussed the option of putting loans upto $ 500 million for rupee expenditure by Indian infrastructure companies under the automatic approval route. At present, such loans need RBI approval.

As a result, sources said, the government may raise the limit for dollar borrowings for rupee expenditure, which would need RBI approval. So, if a company is borrowing say $ 750 million, it can immediately access foreign funds up to $500 million without prior permission, but will need approval for the remaining amount.

Also, the spreads for pricing ECBs with a maturity of five years and above may be widened further to accommodate the rising cost of dollar debt overseas. ECBs are priced as a spread, known as an 'all-in cost ceiling,' over the London Interbank offered Rate, the global benchmark.

A proposal was also discussed to allow on-lending finance companies, especially to the infrastructure sector, to borrow overseas. This, however, will require modifying end-use norms, which currently prohibit on-lending. Many firms have reportedly sought such a relaxation.

Meanwhile, the department of industrial policy and promotion has also started a comprehensive review of FDI norms for sectors that have a ceiling or those that require Foreign Investment Promotion Board approval.