ECB Policy relaxed for refinancing of existing ECBs
24th April, 2012
The Reserve Bank of India has relaxed the External Commercial Borrowing Policy in two phases. The first one provides relaxations to infrastructure and power companies while the second set of concessions are intended to benefit those oprting for refinancing of existing ECBs.
Indian companies in the power sector have been allowed to utilise 40 per cent of the fresh ECB raised towards refinancing of the Rupee loan(s) availed by them from the domestic banking system, under the approval route, subject to conditions. Further, ECBs under the automatic route have been allowed for capital expenditure for the purpose of maintenance and operations of toll systems for roads and highways provided they form part of the original project. As per RBI A.P. (DIR Series) Circular No. 111 dated 20-4-2012 issued in this regard, the liberalizations are as per announcements made in Budget 2012.
Borrowers desirous of refinancing/rescheduling an existing ECB can raise fresh ECB at a higher all-in-cost under the approval route subject to the condition that the enhanced all-in-cost does not exceed the all-in-cost ceiling prescribed as per the existing guidelines. Hitherto, such refinancing was permissible if the fresh ECB was raised at a lower all-in-cost. RBI A.P. (DIR Series) Circular No. 112 dated 20-4-2012 issued in this regard states that the modifications will come into force with immediate effect and will be subject to review.