The finance ministry, in its revised guidelines for external commercial borrowings to be issued in the next 3-4 days, is unlikely to relax the norms for corporates' access to low cost foreign funds.

Finance ministry officials said the piling of forex reserves, expected to touch $100 million in 2003-04, the low credit offtake by Indian banks and a softer interest rate bias made it imperative that corporate India tapped the domestic banks for funds.

The officials also said the Reserve Bank of India had brought to the ministry's notice the negative flow of ECBs during the last fiscal. This meant that companies were using the fresh ECB proceeds to pre-pay earlier high-cost debt.

The ministry had also decided to reduce the all-inclusive interest rate spread above the six-month London Inter Bank Offered Rate.

At present, the cost ceiling ranges between 300 basis points and 450 basis points.

The six-month Libor currently hovers around 1.2-1.4 per cent now. The reduction in the spread will ensure that only companies with good track record can access the foreign markets.

The officials said while corporates were justified in demanding a relaxation of the $100 million ceiling on ECB issues, it was for the government to take a view such that the "national balance sheet" did not suffer.

Further, the finance ministry's view on ECBs over $100 million recently allowed for institutions for restructuring of the steel and textiles sectors, was that these should not be allowed in the future.