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31 July 2019

External Commercial Borrowing (ECB) Policy – RBI eases end-use restrictions


31st July 2019

In order to further liberalize the External Commercial Borrowings (ECB) framework, the Reserve Bank of India has relaxed the end-use restrictions.

Eligible borrowers would be able to raise ECBs with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes. Borrowing by NBFCs, with said maturity period, for on lending has also been permitted.

As per RBI Circular dated 30-7-2019, ECBs with a minimum average maturity period of 7 years can be availed for repayment of Rupee loans availed domestically for capital expenditure. NBFCs can also raise ECBs with such maturity for on-lending for the same purpose.

It may however be noted that for repayment of Rupee loans availed domestically for purposes other than capital expenditure and for on-lending by NBFCs for the same, the minimum average maturity period of the ECB is required to be 10 years.

The Circular also states that the prescribed minimum average maturity provision for the said end-uses will have to be strictly complied with under all circumstances.