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RBI relaxes ECB norms for infrastructure firms

December 5, 2013

The Reserve Bank of India (RBI) relaxed External Commercial Borrowing (ECB) norms for companies raising foreign funds for infrastructure projects. As per the relaxation given by the central bank, firms can now raise funds through the ECB route for their infrastructure projects through their holding companies or core investment firms, which will facilitate them to arrange finances for these projects expeditiously.

As per RBI, such funds should be used in Special Purpose Vehicles (SPVs) for a specific project. Currently, SPVs are permitted to raise ECB funds for infrastructure projects, while there were restrictions for parent firms in doing so.

However, the central bank has stipulated a number of conditions to avail this facility. For example, infrastructure projects are required to be executed by the SPV set up exclusively for the project. The SPV should give an undertaking that no other method of funding, such as trade credit, will be used for that portion of fresh capital expenditure funded through ECB proceeds.

What is External Commercial Borrowing (ECB)?

  • Any money that has been borrowed from foreign sources for financing the commercial activities in India are called External Commercial Borrowings.

  • The Government of India permits ECBs as a source of finance for Indian Corporates for expansion of existing capacity as well as for fresh investment

The ECBs are defined as money borrowed from foreign resources including the following:

  • Commercial bank loans

  • Buyers’ credit and suppliers’ credit

  • Securitised instruments such as Floating Rate Notes and Fixed Rate Bonds etc.

  • Credit from official export credit agencies and commercial borrowings from the private sector window of Multilateral Financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc.

Objective of External Commercial Borrowing (ECB)

  • Government permits the ECBs as an additional source of financing for expanding the existing capacity as well as for fresh investments. The ECB policy of the Government seeks to emphasize the priority of investing in the infrastructure and core sectors such as Power, telecom, Railways, Roads, Urban infrastructure etc.

  • There is also emphasis on the need of capital for Small and Medium scale enterprises.

How ECB is different from FDI?

It must be noted that ECB means any kind of funding other than EquityIf the foreign money is used to finance the Equity Capital, it would be termed as Foreign Direct Investment. 

The ECB should satisfy the ECB regulations stipulated by the Government or its agencies such as RBI. The Bonds, Credit notes, Asset Backed Securities, Mortgage Backed Securities or anything of that nature are included in ECB.

The following are not included in the ECBs

  • Any Investment made towards core capital of an organization such as equity shares, convertible preference shares or convertible debentures. We should note here that those instruments which can be converted into equity are called convertible. The convertible instruments are covered under the FDI Policy.

  • Any other direct capital is not allowed in ECB.

India to host 2017 under-17 FIFA World Cup

December 7, 2013

The Under-17 FIFA World Cup 2017 tournament will be hosted by India. India bagged the landmark rights by beating other bidders like South Africa,Ireland and Uzbekistan.

As a host nation India will get the opportunity to participate in the 24-nation biennial mega event for the first time. This will be the biggest ever footballtournament India will be hosting and the first FIFA event in the country’s history. Previously, India has hosted Asian Football Co federation’s Youth Championships (Under-20) in 2006 and then the AFC Challenge Cup in 2008 but never any FIFA tournament.
This year’s (2013) tournament was hosted by the United Arab Emirates whileChile will be the host country for the 2015 edition.

FIFA president
 Sepp Blatter supported India hosting the event and wants India to build the required infrastructure and facilities.

Oxford researchers develop new malaria vaccine

December 7, 2013

In a major scientific development, scientists at Oxford University have developed a new malaria vaccine which can guard against the deadly mosquito-borne disease.

The vaccine has shown promising results in the first clinical trial in which some of the adult volunteers were completely protected against malaria.

It’s the first time that a vaccine has been shown to have a protective effect through a sufficiently high immune response involving cells called CD8 T cells. It is CD8 immune cells that are seen to vanguard a protective response against malaria in similar studies in mice.

How this vaccine is different from existing vaccines?

At present, every vaccine in use generates antibodies. But there are two divisions to the body’s immune system for combating infection: antibodies and T cells. The latest vaccine is different in a way that it aims to induce an immune response involving T cells particularly CD8+ T cells. CD8 T cells are vital because they are the main killer cells in the immune system. They can attack nearly all types of infected cells – in this case liver cells infected with the malaria parasite.

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