ECBS – Liberalization to avail ECB by Infrastructure Finance Companies

Background:-As per the extant External Commercial Borrowing (ECB) policy, Infrastructure Finance Companies (IFCs) i.e. Non-Banking Finance Companies (NBFCs) categorized as IFCs by the Reserve Bank were permitted to avail of ECBs for on-lending to infrastructure sector under approval route subject to satisfaction of prescribed conditions.

Amendments

The following amendments have been made in the ECB guidelines:

• As a measure of liberalization of the existing procedures, IFCs will now be able to avail of ECBs (including outstanding ECBs) up to 50% of their owned funds under automatic route subject to compliance with the prudential guidelines.
• ECBs above 50% of their owned funds will continue to be considered under the approval route.
• All other conditions under the ECB policy, such as USD 500 million limit per company per financial year under the Automatic route, eligible borrower, recognised lender, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

Source: A.P. (DIR Series) Circular Nos. 51 dated 11 May 2010