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RBI eased Companies' Foreign Funding Norms for Infra Projects

Dec 4, 2013 12:02 IST

The Reserve Bank of India on 3 December 2013 eased norms for companies raising foreign funds for infrastructure projects.
The new norms will help Companies to raise funds through the External Commercial Borrowing (ECB) route for their infrastructure projects through their holding firms or core investment firms. This will enable them to arrange finances for their projects faster and strengthen the flow of resources in the sector.

The RBI also stated that such funds should be used in special purpose vehicles (SPVs) for a specific project. Presently, the SPVs are allowed to bring in ECB funds for infrastructure projects, while there were restrictions for parent firms in doing so. The Reserve bank, however, has listed a series of conditions to avail this facility.

What is External Commercial Borrowing?

External Commercial Borrowing is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs.

External Commercial Borrowings (ECB) refers to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit, securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares) availed of from non-resident lenders with a minimum average maturity of 3 years.

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Read more Current Affairs on: Reserve Bank of India , External Commercial Borrowings

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