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RBI revises ECB framework

The Reserve Bank of India has revised the external commercial borrowings (ECBs) framework thereby allowing companies and non-banking finance companies in the infrastructure sector to raise resources from overseas markets with minimum average maturity of five years. ECBs refer to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit and securitized instruments taken from non-resident lenders with a minimum average maturity of three years. RBI said companies in the infrastructure space, NBFC-IFCs, NBFC-AFCs, holding companies and core investment companies will also be eligible to raise ECB under Track I (medium-term foreign currency denominated ECB) of the framework with minimum average maturity period of five years, subject to 100% hedging. The individual limit of borrowing under the automatic route for the aforesaid companies will be as applicable to the companies in the infrastructure sector (currently $750 million). According to RBI, companies in the infrastructure sector, holding companies and CICs will continue to have the facility of raising ECBs under Track II (long-term foreign currency denominated ECB with minimum average maturity of 10 years) of the ECB framework subject to the conditionalities prescribed thereof.

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