Centre puts on hold Sahoo panel's recommendations on external commercial borrowing: Sources

NEW DELHI: The government has decided to put on hold the recommendations of the Sahoo panel on External Commercial Borrowing, sources in the Finance Ministry told ET now. "The ministry feels that the panel recommendations are too drastic in current situation," the sources said.

"The government is in talks with the Reserve Bank of India on the panel's recommendations," said the sources.

The committee headed by M S Sahoo, a former member of Sebi, was given the task to review the rules on external commercial borrowings. The panel submitted its report this February. This was the third report submitted by the panel which was set up in 1993 by the UPA government to originally look in to the matter of depository receipt mechanism.

The panel in its report had recommended the removal of limits on external commercial borrowings by the government. It was also in favour of removing end-use restrictions, and had recommended that every borrower should hedge a part of their borrowing.

"Complete liberalisation of ECBs is a risk to economic stability," sources told ET Now.

"The government and RBI are unsure of the impact hiked ECB will have on quantum of borrowing," said the sources. Currently the limit for each company to raise funds through ECB is $750 million in a financial year barring in segments such as hotel, hospital and software sectors.