The RBI has decided to relax norms for end-use of funds raised via the external commercial borrowing (ECB) route by companies and non-banking finance companies, following feedback from various stakeholders.
The central bank said the relaxation was for working capital requirements, general corporate purposes and repayment of rupee loans.
Eligible borrowers will now be allowed to raise ECBs with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes.
“Borrowing for on-lending by NBFCs for the above maturity and end-uses is also permitted,” RBI said.
RBI also said that ECBs with a minimum average maturity period of seven years can be availed by eligible borrowers for repayment of rupee loans, availed domestically for capital expenditure, as also by NBFCs for on-lending for the same purpose.
For repayment of rupee loans availed domestically for purposes other than capital expenditure and for on-lending by NBFCs, the minimum average maturity period of the ECB is required to be 10 years.
RBI has also decided to allow corporate borrowers to raise ECBs for repayment of rupee loans availed domestically for capex in manufacturing and infrastructure, if classified as SMA-2 (special mention account) or NPA, under any one-time settlement (OTS) with lenders.
