RBI Enhances ECB Limit For NBFC-IFCs Under Automatic
Route From
50% Of Owned Funds To 75%
Notification No.: RBI/2012-13/367, dated 7th January, 2013
As per the current 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 (Department of Non Banking
Supervision) Circular dated February 12, 2010 are permitted to avail of External Commercial Borrowings (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.
Now
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.
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.
Designated Authorized Dealer (AD) 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 route while forwarding such proposals to the Reserve Bank of India
as per A.P. (DIR Series) Circular No.70 dated January 25, 2012.
The amended
ECB policy will come into force with
immediate effect and is subject to review based on the experience gained in
this regard.
All other aspects of ECB policy, such as, eligible borrower, recognized lender, end-use,
average maturity period, all-in-cost, maximum permissible limit under the
automatic route, prepayment, refinancing of
existing ECB and reporting arrangements remain
unchanged.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower
26, Barakhamba Road
Connaught Place, Delhi -110001
Mobile:- +91-9873082769
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