The Reserve Bank of India (RBI) on Thursday decided to allow companies to raise funds through external commercial borrowing (ECB) to repay loans of the stressed firms they are bidding for under the Insolvency and Bankruptcy Code (IBC). However, RBI governor Shaktikanta Das ruled out any change to the central bank\u2019s February 12 circular that mandates banks to refer any default case where they are unable to find resolution in six months to the IBC. The circular, which is challenged at the Supreme Court, was a bone of contention between the RBI under Urjit Patel and the government, with the latter pitching for a relief to at least power producers from its \u201cstringent\u201d provisions. The special dispensation for resolution applicants under the IBC will help large corporations with good credit ratings to raise ECB at cheaper rates to fund acquisition of the stressed assets, at a time when the insolvency law is being tapped more vigorously than traditional mechanisms to resolve the bad debt menace. Also read|\u00a0RBI Monetary Policy: RBI cuts repo rate by 25 bps, changes policy stance to neutral Currently, ECB proceeds, denominated in either foreign currency or the rupee, are not permitted to be used for repayment or on-lending for repayment of domestic rupee loans. The move comes when several high-profile cases are at various stages of resolution. Of the 12 large cases (with total admitted claims of Rs 3.63 lakh crore) recommended by the central bank for resolution under the IBC, seven, including Essar Steel and Bhushan Power and Steel, are yet to be resolved. The central bank later recommended 29 more cases for resolution under the IBC. \u201c.it is proposed to relax the end-use restrictions under the approval route of the ECB framework for resolution applicants under CIRP (Corporate Insolvency Resolution Process) and allow them to utilise the ECB proceeds for repayment of rupee term loans of the target company,\u201d the central bank said in a statement after the sixth bi-monthly monetary policy review. Addressing media, Das ruled out the possibility of unscrupulous elements abusing this move. \u201cOur decision gives no room to fly-by-night operator to bring in money just for the sake of bringing in money,\u201d Das said. It's a well-regulated process and only those companies which have been identified under the resolution process will be able to tap this route, he said. The central bank will issue more guidelines in this regard by the end of this month. The IBC has proved to be far superior than other tools to recover dues. According to a recent RBI report on trends in banking, lenders recovered as much as 41.3% of their claims in cases where resolution took place under the IBC in FY18, against just 12.4% through other mechanisms such as the SARFAESI Act, debt recovery tribunals and Lok Adalats.