RBI revises ECB rules for long term funding

ECB framework was revised by RBI

ECB framework was revised by RBI
ECB framework was revised by RBI

ECB framework was revised by RBI

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]To allow infrastructure firm to borrow up to five years the Reserve Bank of India (RBI) has revised the overseas borrowings or external commercial borrowings (ECBs) framework as the critical need for long-term funding of infrastructure sector in the country.

The RBI said in a statement on Wednesday, “with a minimum average maturity period of five years, subject to 100 percent hedging the Companies in the infrastructure sector, non-banking financial companies -infrastructure finance companies, NBFCs-asset finance companies, holding companies and core investment companies (CICs) are eligible to raise ECBs under Track I of the framework”.

“For ECB purposes, the exploration, mining and refinery activities would also be treated as infrastructure in the revised framework.

For on-lending to infrastructure special purpose vehicles the holding companies and CIC’s are allowed to use External Commercial Borrowings proceeds only.

Irrespective of the amount of borrowing the minimum average maturity of foreign currency convertible bonds/foreign currency exchangeable bonds is five years
In India by registered foreign portfolio investors the ECB framework is not applicable in respect of the investments in non-convertible debentures, said RBI.

ECB framework RBI

Here is the draft of ECB framework.



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