Sources said the move was prompted due to a breach in the existing ceiling. While the high-level co-ordination committee (HLCC) on ECB is expected to meet only next month, the government on Monday discussed possible measures to hike the internal ceiling imposed on the total borrowings in foreign currency.
The tightening of the end-use norms for using dollars proceeds could be eased, sources said. If the move being pushed by the finance ministry goes through, companies would be able to use more dollars borrowings for rupee expenditure.
Last year, in the wake of unprecedented inflows, the government and the RBI had the clamped down on using dollar receipts for rupee expenses beyond $20 million.
The proposal is to relax the ceiling for all companies instead of the earlier move to open the window only for infrastructure companies. Once the HLCC approves the proposals, there could be a separate window for infrastructure companies and could result in opening up the ECB route with relaxed end-use norms.
The spread on Libor borrowing might also be revised upwards to enable small and medium enterprises (SMEs) to borrow overseas. London Interbank Offered rate (Libor) is the international interest rate benchmark for borrowings.
The RBI is of the view that the clampdown has hit the SMEs much more than the large companies and infrastructure entities. Besides the clampdown, the SMEs are also affected since the spreads pegged to Libor for pricing of ECBs were narrowed by the RBI last year.
This is hurting SMEs more since the spreads for borrowing overseas for top-rated Indian companies have gone up sharply following the dollar crunch in the market .
The central bank had, however, suggested a review only after the annual monetary policy slated for the last week of April. Sources said, a review could have been done after assessing the prospect of dollar inflows in the medium-term.
Higher inflation, which is back to the 6 per cent level, was one of the prime reasons for the RBI to check ECBs for rupee expenditure in August last year.
