The Reserve Bank of India will allow take-out financing through external commercial borrowings (ECB) for refinancing of rupee loans availed of from domestic banks.
“As per the extant norms, refinancing of domestic rupee loans with ECB is not permitted. However, keeping in view the special funding needs of the infrastructure sector, it has been decided to review the ECB policy and put in place a scheme of take-out finance,” the RBI stated in a notification on Thursday.
Accordingly, it has been decided to permit take-out financing arrangement through ECB, under the approval route, for refinancing of rupee loans availed of from the domestic banks by eligible borrowers “in the sea port and airport, roads including bridges and power sectors for the development of new projects.” However, the RBI stipulated that the corporate developing the infrastructure project should have a tripartite agreement with domestic banks and overseas recognized lenders for either a conditional or unconditional take-out of the loan within three years of the scheduled commercial operation date.
