New Delhi: The Indian government Thursday allowed the aviation sector to raise up to $1 billion through external commercial borrowings (ECBs) to meet working capital requirements for one year and help the industry tide over the current financial crunch, the finance ministry said in a statement.
The fund raising limit for an individual airline via the ECB has been fixed at $300 million, the statement said.
"This limit can be availed either in a lump sum or in tranches depending upon the utilization of the limit during the one year when the facility is available," it added.
The Reserve Bank of India (RBI) will consider the proposals of airlines to raise funds in overseas borrowings depending on cash flows and capacity of the companies to repay loans, it said.
The central bank will further consider relaxation in the average maturity period for ECBs above $20 million from five to three years to boost access to ECBs.
In the Union Budget 2012-13, the government had proposed to allow airlines to raise funds up to $1 billion through overseas borrowings for one year to meet working capital requirements.
The RBI is expected to issue relevant notification giving effect to the aforesaid Budget announcement within seven days.