Based on the recommendations of stakeholders, the Reserve Bank of India (RBI) has liberalised end-use provisions for external commercial borrowings (ECBs) through a circular dated 30 July 2019 (Circular).
Per the Circular, eligible borrowers are now permitted to raise ECBs from recognised lenders, except foreign branches/ overseas subsidiaries of Indian banks, for the following purposes:
- Working capital purposes and general corporate purposes, with a Minimum Average Maturity Period (MAMP) of 10 years. Non-Banking Financial Companies (NBFCs) can also raise ECBs for on-lending for the said purposes with an MAMP of 10 years.
- Repayment of rupee loans availed domestically for capital expenditure and by NBFCs for on-lending for the same purpose with an MAMP of 7 years.
- Repayment of rupee loans availed domestically for non-capital expenditure purposes and by NBFCs for on-lending for the same purpose, the MAMP shall be 10 years;
- Repayment of rupee loans in the manufacturing and infrastructure sector, availed domestically for capital expenditure where such loans are classified as SMA-2 or Non-Performing Assets. Lender banks are also permitted to sell such loans to eligible ECB lenders, except foreign branches/ overseas subsidiaries of Indian banks, provided, the resultant ECB complies with all-in-cost, MAMP and other relevant norms of the ECB framework.
The Circular can be accessed through the following link: