RBI relaxes ECB norms for cos, NBFC's

RBI relaxes ECB norms for cos, NBFC's

Reserve Bank of India. (Reuters)

In more liquidity easing measures, the Reserve Bank Tuesday liberalised the end-use stipulations for the external commercial borrowings both for corporates as well as liquidity starved non-banking lenders.

The liberalisation relates to ECBs taken for working capital, general corporate purpose loans or repayment of rupee loans, the central bank said in a statement.

Corporate borrowers will be able to avail of ECBs to repay rupee loans taken for Capex if they are into manufacturing or infrastructure building and classified as SMA-2 or NPA, under any one-time settlement arrangement with lenders, the RBI said.

"Banks are also permitted to sell such loans to eligible ECB lenders, except foreign branches/overseas subsidiaries of domestic banks, if the resultant ECB fund complies with all-in-cost, minimum average maturity period and other relevant ECB norms," the RBI said.

Eligible borrowers will now be allowed to raise foreign debt with a minimum average maturity of 10 years for working capital and general corporate loans, it said, adding borrowing for on-lending by NBFCs for the above maturity and end-uses is also permitted.

Borrowers will also be allowed to raise ECBs with a minimum maturity of seven years for repayment of rupee loans taken to fund Capex, it said, adding borrowings for on-lending by NBFCs for repaying rupee loans will also be permitted.

For repayment of rupee loans availed domestically for purposes other than capex and for on-lending by NBFCs for the same, the minimum average maturity will have to be 10 years.

The RBI also issued a revised circular for bankers capturing the changes.