Airlines to get approval to tap foreign loans

Senior airline executives said allowing external commercial borrowings for raising working capital can be a game changer for the sector. Distressed Indian airlines may get a new line of funding from foreign lenders, as the government is mulling opening up the external commercial borrowing (ECB) route for them to raise working capital. The civil aviation ministry has sought the intervention of the Finance Ministry to allow airlines to tap foreign funds. Airlines, in their correspondence with the government, have requested that since aviation has become a primary mode of transport and an essential part of the infrastructure, they should be given benefits such as access to ECB for working capital. The ministry has also asked that the cap of such borrowings is to be set at $500 million (Rs 34.5 billion) for a single company and $1 billion (Rs 69 billion) for the entire sector. Some airlines had demanded that the cap be higher. ECBs are loans raised by an Indian corporate entity from a foreign commercial bank or other financial institutions to be used for commercial purpose such as capital expenditure.

[Source: The Business Standard]

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