The RBI said companies would now be able to borrow up to $50 million in ECBs with three-year maturities and more than $50 million for five-year maturities, from the earlier $20 million.
The draft paper also said the central bank would now allow real estate investment trusts and infrastructure investment trusts to raise rupee-denominated funds offshore, a step likely to provide some relief to the cash-strapped real estate sector in India.
"An attempt has now been made to replace the ECB policy with a more rational and liberal framework, keeping in view the evolving domestic as well as global macro-economic and financial conditions," the RBI said in a statement.
However, the RBI also proposed tightening how much companies can pay to borrow via ECBs, saying it would lower by 50 basis points (bps) the current all-in-cost ceiling of 350 bps over six-month Libor for three-five-year loans and 500 bps over Libor for above five-year maturities.
The central bank has also proposed wider range for end-use of proceeds raised via ECB. Apart from capital expenditure, modernization of projects and working capital loans, companies can now raise funds to repay trade credit taken up to three years for capital expenditure, for payments towards capital goods already shipped, purchase of second-hand domestic capital goods, plants and machinery, among others. ECB can also be raised for overseas direct investment in joint venture and wholly-owned subsidiaries by core investment companies.
"A framework for issuance of rupee denominated bonds overseas will be announced separately," RBI said. The RBI asked market participants to provide feedback by October 11, 2015.