| ECB Norms relates for NBFC
|
| In order to tide over the fund crunch of Non-Banking Financial Companies, the Reserve Bank of India, vide A.P. (DIR Series) Circular No. 69 dated 7th January, 2013, has relaxed External Commercial Borrowing (ECB) norms for Infrastructure Finance Companies (IFCs). |
| As per the extant guidelines Non-Banking Financial Companies (NBFC) categorized as Infrastructure Finance Companies (IFCs) are allowed to obtain ECBs up to 50% of their owned funds including the outstanding ECBs under the automatic Route and above 50% under the approval route. |
| The Reserve Bank of India on a review has revised the ECB limit under automatic route from 50% to 75% for NBFC-IFCs. As per the amendment the NBFCs categorized as IFCs are now allowed to avail ECB up to 75% of their owned funds including outstanding ECB under the automatic route and above 75% under the approval route. |
| Also the hedging requirement has been reduced to 75% of their exposure from the prevailing threshold of 100% of their exposure. Certification of the leverage ratio will continue to be done by the AD both under the automatic route as well as approval route. |
| The RBI move is expected to help such infrastructure finance companies to raise overseas funds at attractive rates. |
