It has been decided to make the
following changes in the ECB framework:
i.
Companies
in infrastructure sector, Non-Banking Financial Companies, Holding Companies
and Core Investment Companies (CICs) will also be eligible to raise ECB under
Track I of the framework with minimum average maturity period of 5 years,
subject to 100 per cent hedging.
ii.
For
the purpose of ECB, “Exploration, Mining and Refinery” sectors will be deemed
as infrastructure sector, and can access ECB as
applicable.
iii.
Companies
in infrastructure sector shall utilize the ECB raised under Track I for the end
uses permitted for this Track. NBFCs-IFCs and NBFCs-AFCs will, however, be
allowed to raise ECB only for financing infrastructure.
iv.
Holding
Companies and CICs shall use ECB only for on-lending to infrastructure Special
Purpose Vehicles.
v.
The
individual limit of borrowing under the automatic route shall be as applicable
to the companies in the infrastructure sector (USD 750 million).
vi.
Companies
in infrastructure sector, Holding Companies and CICs will continue to have the
facility of raising ECB under Track II.
It
is further clarified that:
i.
The
designated AD Category-I banks may allow refinancing of ECBs raised under the
previous ECB framework, provided
· the refinancing
is at lower all-in-cost,
· the borrower is
eligible to raise ECB and
· residual
maturity is not reduced.
ii.
ECB
framework is not applicable to investment in Non-convertible Debentures made by
Registered Foreign Portfolio Investors.
iii.
Minimum
average maturity of Foreign Currency Convertible Bonds & Foreign Currency
Exchangeable Bonds is 5 years. The call and put option, for FCCBs cannot be
exercised prior to 5 years.
iv.
Only
those NBFCs which are coming under the regulatory purview of the Reserve Bank
are permitted to raise ECB. Under Track III, the NBFCs may
raise ECBs for on-lending for any activities including infrastructure.
v.
The
provisions regarding delegation of powers to designated AD Category-I banks is
not be applicable to FCCBs/FCEBs.
All other
aspects of the ECB policy shall remain unchanged.
Based on RBI notification dated
30/03/16. For further clarifications, please refer www.rbi.org.in …………….Poppy Sharma
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