Reliance Infra's plans to raise money to make up-front payment for Mumbai's Bandra-Worli sea-link have come to nought. CNBC-TV18's Aakansha Sethi learns the government has rejected a proposal to raise 375 million dollars through the ECB route.
Reliance Infra's plans to raise money to make up-front payment for Mumbai's Bandra-Worli sea-link have come to Nought. CNBC-TV18’s Aakansha Sethi learns the government has rejected a proposal to raise 375 million dollars through the ECB route.
The ECB policy currently says that you cannot fund working capital requirements or receivables through ECB borrowings. One can only do it for fresh capital expenditure.
The RBI said if the Reliance Infra proposal for raising USD 375 million as ECBs to finance the upfront payment for acquisition of tolling rights to MSRDC, is allowed, it will lead to securitization of future rupee receivables.
Also, RBI said it would set a precedent for financing a working capital requirements and receivables through ECBs and this could have implications for capital account and liquidity management at a later stage.
Hence, the RBI was opposed to this. The matter came up for discussion in the HLC on ECBs on the May 27 but the proposal was rejected, remains to be seen if its taken up at a latter stage or how Reliance manages to fund that Rs 1634 crore payment to MSRDC
Source: www.moneycontrol.com
Neeraj Rajgarhia
Summer Intern - Technical Analyst
DENIP Consultants Pvt. Ltd.
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