In a bid to ensure easy financing for the core sector, the Reserve Bank of India (RBI) on Tuesday decided to modify the extant external commercial borrowings (ECB) policy in respect to infrastructure finance companies (IFCs) and non-banking financial companies (NBFCs) categorised as IFCs by the central bank. Infrastructure companies have hailed this move.
?As a measure of liberalisation of the existing procedures, it has been decided to permit IFCs to avail themselves of ECBs, including the outstanding ones, up to 50% of their owned funds under the automatic route, subject to their compliance with the prudential guidelines already in place. ?ECBs by IFCs above 50% of their owned funds would require an approval of the RBI and will, therefore, be considered under the approval route,? the RBI said in a notification.
Said Rajiv Lall, CEO & MD of IDFC, ?There will be a lot of interest from infrastructure companies following the RBI modification in terms of ECBs. We will also be taking the ECB route to raise funds in the next few months. This step will help us lengthen the maturity profile and also diversify our base.? The central bank noted that all the other aspects of the ECB policy, such as $500-million limit per company per financial year under the automatic route, eligible borrower, end-use, average maturity period, refinancing of existing ECB and reporting arrangements, will remain unchanged.