RBI names independent gatekeepers for clearance of external borrowings

The Reserve Bank of India has for the first time given the power to clear applications for external commercial borrowings of above $500 mill...

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The Reserve Bank of India has for the first time given the power to clear applications for external commercial borrowings of above $500 million to an external group of experts.

The three members on the committee are former State Bank of India chairman Dipankar Basu, Infrastructure Finance and Development Corporation’s managing director Naseer Munjee and National Securities Depository Ltd’s managing director CB Bhave.

In the past, ECB applications were vetted by the Union Finance Ministry. Finance Minister Jaswant Singh has now authorised RBI to name a non-official panel to vet ECB applications.

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The committee will meet at the end of very month to vet forex loan proposals in excess of $500 million, and give its view to the central bank on the merits of the same. Furthermore, to impart transparency to the entire process, it has also been decided to put in public domain the details of all such applications, and the names of the borrowers involved.

Meanwhile, the RBI’s internal committee will have on board the chief general managers of the Department of Banking Operations and Development, and the Industrial and Export Credit Department — CR Muralidharan and Prasant Sharan. The convenor will be the chief general manager in-charge of the foreign exchange department, Grace Koshie.

It has been learnt that an external committee has been set up to cut out the haggling that reportedly goes on within the bureaucracy over the clearance of forex loans in general. Corporate rivalries are not unknown to influence decision-making in such cases, and there have been whispers that at one level, it is not a question of who gets the nod, but who does not get it.