RBI allows infrastructure firms to borrow overseas for shorter tenor of three to five years

MUMBAI: Reserve Bank of India has revised the overseas borrowings or external commercial borrowings ( ECB) framework for Indian firms and allowed infrastructure firms to borrow upto five years.

As per the new framework, infrastructure firms, non-banking finance companies -Infrastructure Finance Companies (NBFC-IFCs), NBFCs-Asset Finance Companies (NBFC-AFCs), holding companies and core investment companies (CICs) will also be eligible to raise ECB for minimum average maturity period of five years, subject to 100 per cent hedging, the Reserve Bank said in a release on Wednesday.

They will be continued to be allowed to borrow for even longer term upto ten years.

The revised framework also stipulates that exploration, mining and refinery activities will also be treated as infrastructure for ECB purposes.

Minimum average maturity of Foreign Currency Convertible Bonds (FCCBs)/ Foreign Currency Exchangeable Bonds (FCEBs) is five years irrespective of the amount of borrowing.

Only those NBFCs which are coming under the regulatory purview of the Reserve Bank are permitted to raise ECB.