RBI relaxes borrowing rules for mobile auction winners

MUMBAI Tue Nov 27, 2012 12:02am IST

The sun rises behind a communications tower in New Delhi March 20, 2006. REUTERS/B Mathur/Files

The sun rises behind a communications tower in New Delhi March 20, 2006.

Credit: Reuters/B Mathur/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The Reserve Bank of India (RBI) has relaxed overseas borrowing rules for successful bidders in the country's cellphone airwaves auction, making it easier for them to raise money to pay the cash-strapped government.

The RBI said on Monday the winning bidders could use short-term foreign currency loans as bridge finance, without seeking approval from regulators.

The companies can then replace these short-term borrowings with long-term external (or overseas) commercial borrowings (ECB), provided the ECB is raised within a period of 18 months from the drawdown of the bridge finance, it added.

The mobile operators will also be able borrow from their parent companies without any limit, provided the parent owns a minimum 25 percent equity in the local company, the RBI added.

The central bank said successful bidders making upfront payments for spectrum via rupee loans would be able to refinance those loans with a long-term ECBs, also without seeking regulatory approval.

Five companies - a unit of Norwegian telecommunications carrier Telenor (TEL.OL), Vodafone Group Plc's (VOD.L) Indian unit, Idea Cellular (IDEA.NS), Videocon Telecommunications and Bharti Airtel Ltd (BRTI.NS) - bought airwaves worth a total 94 billion rupees in an auction earlier this month.

The auction raised less money than the government hoped, and officials have since said it will struggle to meet its deficit target for 2012-13.

The companies are required to pay by December 1, although they can pay in installments.

(Reporting by Shamik Paul; Editing by Mark Potter)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

WTO

REUTERS SHOWCASE

Factory Activity

Factory Activity

Factories post fastest growth for 17 months in July  Full Article 

Car Launch Ahead

Car Launch Ahead

Tata Motors bets on new sedan to revive weak India sales.  Full Article 

Gold Smuggling

Gold Smuggling

In cat-and-mouse game, India uncovers new gold smuggling route.  Full Article 

Market Eye

Market Eye

FII selling of Indian stocks on Thursday biggest in a month  Full Article 

Profit Falls

Profit Falls

DLF quarterly profit falls 29 pct on lower home sales  Full Article 

Re-gaining Momentum

Re-gaining Momentum

China PMIs jump to multi-month highs in July, add to view economy is steadying  Full Article 

Coal India

Coal India

Some Coal India mines may be run by foreign firms - minister  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage