External Commercial Borrowings (ECB) Policy – Non-Banking Financial Company – Infrastructure Finance Companies (NBFC-IFCs)- Further Relaxation
As per the extant guidelines, Non-Banking Finance Companies (NBFCs) categorized
as Infrastructure Finance Companies (IFCs) by the Reserve Bank and complying
with the norms prescribed in the DNBS Circular DNBS.PD.CC.No.168/ 03.02.089/2009-10 dated February
12, 2010 are permitted to avail of ECBs, including the outstanding ECBs, up
to 50 per cent of their owned funds under the automatic route. ECBs by IFCs
above 50 per cent of their owned funds are being considered under the approval
route. The permitted end-use should be for on-lending to the infrastructure
sector, as defined under the extant ECB policy. IFCs should also hedge their
currency risk in full.
On a review, it has been decided to enhance the ECB limit
for NBFC-IFCs under the automatic route from 50 % of
their owned funds to 75 % of their owned funds, including the outstanding ECBs.
NBFC-IFCs desirous of availing ECBs beyond 75 % of their owned funds would
require the approval of the Reserve Bank and will, therefore, be considered
under the approval route.
4. It has also been decided to reduce the hedging requirement
for currency risk from 100 per cent of their exposure to 75 per cent of their
exposure.
5. Designated Authorized Dealer banks should ensure compliance
with the extant norms while certifying the ECB application both under the
automatic and approval routes. Designated AD Category – I banks shall continue
to certify the leverage ratio (i.e. outside liabilities/owned funds) of
NBFC-IFCs desirous of availing ECBs under the approval routewhile forwarding
such proposals to the Reserve Bank of India as per A.P. (DIR Series) Circular No.70 dated January 25, 2012.
