The Reserve Bank eased norms to refinance external commercial borrowings (ECB) and allowed banks to approve even those cases where the average maturity period (AMP) of fresh borrowings exceeds residual maturity of existing loan.
However, borrowers would be required to follow certain conditions to avail for a fresh ECB. “In a review, it has been decided to simplify the procedure by delegating powers to banks to approve even those cases where the AMP of the fresh ECB is exceeding the residual maturity of the existing ECB under the automatic route,” RBI said.
RBI said both the existing and fresh ECBs should be in compliance with the applicable guidelines, all-in-cost of fresh ECB should be less than the all-in-cost of existing ECB and consent of the existing lender should be available.
Among other conditions, refinancing is to be undertaken before the maturity of the existing ECB and borrower should not be in the default or caution list of RBI and should not be under the investigation of the Directorate of Enforcement.
It further said the overseas branches or subsidiaries of Indian banks will not be permitted to extend ECB for refinancing an existing ECB.
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