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End-use norms for external commercial borrowings eased
Why is it in the news?
- The Reserve Bank of India (RBI) on Tuesday relaxed norms for end-use of money raised through external commercial borrowings (ECBs).
More in the news
- ECBs are commercial loans raised by eligible resident entities from recognised lenders, except foreign branches/overseas subsidiaries of Indian banks.
- So far, ECB proceeds could not be utilised for working capital purposes, general corporate purposes, and repayment of rupee loans.
- There was an exception- when the ECB is availed of from the foreign equity holder for a minimum average maturity period of five years.
New Changes:
- As per the relaxed ECB end-use provisions, the RBI has permitted ECBs with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes.
- Borrowing by NBFCs for this maturity for on-lending for the above purposes is also permitted.
- The central bank said the relaxation was for working capital requirements, general corporate purposes and repayment of rupee loans.
- ECBs, with a minimum average maturity period of seven years, can be availed by eligible borrowers for the same purpose.
Source
The Hindu.