The Reserve Bank of India has relaxed norms for end-use of money raised through external commercial borrowings. ECBs with a minimum average maturity period of seven years can be availed for repayment of rupee loans availed domestically for capital expenditure as also by NBFCs for on-lending for the same purpose. For repayment of rupee loans availed domestically for purposes other than capital expenditure and for on-lending by non-banking financial companies (NBFCs) for the same, the minimum average maturity period of the ECB is required to be 10 years. According to RBI, ECBs with a minimum average maturity period of 10 years can be used for working capital purposes and general corporate purposes and borrowing by NBFCs for the above maturity on lending for the above purposes is also permitted. Lenders, RBI said, are also permitted to sell, through assignment, such loans to eligible ECB lenders, except foreign branches or overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework. It has been decided to permit eligible corporate borrowers to avail ECB for repayment of rupee loans availed domestically for capital expenditure in manufacturing and infrastructure sector if classified as SMA-2 or NPA, under any one time settlement with lenders. Lenders are also permitted to sell, through assignment, such loans to eligible ECB lenders, except foreign branches or overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework, RBI statement added.
📅Published on:
31 July 2019
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