Giving a boost to infrastructure sector funding, the Reserve Bank of India, on Tuesday, relaxed the external commercial borrowings (ECB) norms to help companies raise more funds from overseas markets.

The RBI has allowed companies engaged in the infrastructure sector to raise bridge finance from overseas markets under the automatic route.

“On a review, it has been decided to allow refinancing of such bridge finance (if in the nature of buyers’/suppliers’ credit) availed of, with an ECB under the automatic route,” the central bank said in a notification.

Under the earlier provision, the companies were required to take permission of the RBI for raising bridge finance, which is a kind of interim arrangement for short-term credit.

Capital goods

The RBI through a separate notification, has also allowed companies in the infrastructure sector to raise ECB up to a maximum period of five years for importing capital goods.

Under the new norms, trade credit should not be for a period of less than 15 months and also not in the nature of short-term rollover finance.

Earlier, the companies could raise ECBs for a period ranging from one year to three years.

The RBI notification further said that the all-inclusive costs, which include arranger fee, upfront fee, management fee among others, of such borrowing should not be over 3.5 per cent of six months Libor.

The credit facility would be available up to $20 million per transaction for import of capital goods as classified by the Directorate General of Foreign Trade (DGFT).

The RBI has also relaxed the ECB norms for repayment of rupee loans within the overall ceiling of $20 billion.

As per the RBI notification, the permissible limit of ECB has been increased from 50 per cent to 75 per cent of the average foreign exchange earnings realised during the past three financial years or 50 per cent of the highest forex earning in a year. The limit of the maximum ECB which can be availed of by an individual or group company under the scheme has been pegged at $3 billion.