As part of stimulus package announced earlier the govt had relaxed norms for ECB (external Commercial Borrowing) However, these relaxations are due to expire on June 30, 2009. According to our sources RBI wants these relaxations to go away while the Finance ministry wants to continue with them. The difference of opinion is mainly on the count that RBI wants its control over the amount raised through this route & the pricing of the issue so it wants companies to take RBI's approval on both amount & price. While the Finance Ministry is in favor of putting any ECB issue into automatic route which means corporates just have to inform RBI but no approval is required up to $ 500m & no permission required on what price the issue is made. If the Finance ministry's proposal is accepted then it will be extremely positive for the banks as well as the equity mkts. Therefore we expect banking sector to remain buoyant in next few sessions.
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