Srei BNP Paribas for relaxation in ECB norm for local equipment

KOLKATA: SreiBNP Paribas has sought from the RBI to allow External Commercial Borrowing ( ECB) for financing domestically manufactured construction equipment.

"There is a strong case for allowing NBFC-AFCs to utilise ECB for financing domestically manufactured equipment which will provide a fillip to the industry," Srei BNP Paribas CEO D K Vyas told PTI here.

In the recent notification, RBI had said that NBFC-AFCs (asset finance companies) could only utilise ECB funds on imported equipment, he said.

Srei BNP Paribas is a 50:50 JV between Srei Infrastructure Finance Ltd, and Paris headquartered bank BNP Paribas.

Srei BNP claiming to command 30 per cent market-share in infrastructure and construction equipment financing said the modification would help the sector and provide a boost to the domestic manufacturing sector besides generating employment.

The Finance Industry Development Council (FIDC), a SRO for NBFCs, has not taken any view on the RBI's recent guideline on ECB for NBFC-AFCs.

"We are yet to take a view and whether to make a representation to RBI on its circular on ECB. We will take a view in the next two days," FIDC Director General Mahesh Thakker said when contacted.

Vyas said the government should encourage NBFC-AFCs to determine the tenor as per the nature of the assets.

He also urged RBI to replace the word 'leasing' with 'financing' in the existing rules so that NBFC-AFCs could try out multiple models of financing with the ECB funds.