The Reserve Bank of India (RBI) on Wednesday relaxed overseas borrowings norms to help companies raise funds for infrastructure projects in the country.
The central bank said it has reviewed the extant External Commercial Borrowings (ECB) guidelines in consultation with the government after “taking into account prevailing external funding sources, particularly for long-term lending and the critical needs of infrastructure sector of the country”.
Now, firms in the infrastructure sector, Non-Banking Financial Companies-Infrastructure Finance Companies (NBFCs-IFCs), NBFC-Asset Finance Companies (NBFC-AFCs), Holding Companies and Core Investment Companies (CICs) will also be eligible to raise ECB with the minimum average maturity period of five years, subject to 100% hedging.
Further, ‘Exploration, Mining and Refinery’ sectors which are not included in the list of infrastructure sector but were eligible to take ECB will be deemed as in the infrastructure sector, and can access ECB as applicable to the infrastructure sector, RBI said.
“Companies in infrastructure sector shall utilise the ECB proceeds raised under Track-I for the end uses permitted for this Track. NBFCs-IFCs and NBFCs-AFCs will, however, be allowed to raise ECB only for financing infrastructure,” it added.
Holding Companies and CICs shall use ECB proceeds only for on-lending to infrastructure Special Purpose Vehicles (SPVs). Track-I refers to medium-term foreign currency denominated ECB with minimum average maturity of 3/5 years.
The individual limit of borrowing under the automatic route for these companies is $750 million (nearly Rs 4,989.56 crore). Only those NBFCs which are coming under the regulatory purview of the Reserve Bank of India (RBI) are permitted to raise ECB.
It’s perfect time to make some plans for the future and it is
time to be happy. I’ve read this post and if I could I wish to suggest you some interesting things or advice.
Perhaps you could write next articles referring to this article.
I want to read even more things about it!