The Reserve Bank of India (RBI) has announced that it has relaxed norms on end-use of funds via external commercial borrowings, making it more attractive and viable for corporates including Non-banking Finance Companies (NBFCs) to raise cheaper offshore funds.
The apex bank has said that based on feedback from stakeholders and with a view to further liberalise the External commercial borrowing (ECBs) framework it has been decided to relax the end-use restrictions and allow the use of funds for working capital requirements, general corporate purposes, and repayment of rupee loans.
ECBs with a minimum average maturity period of 10 years can now be used for working capital purposes and general corporate purposes, the RBI said in a release.
“Borrowing for on-lending by NBFCs for the above maturity and end-uses are also permitted,” it added.
The RBI will also permit corporates to use ECB for repayment of rupee loans raised domestically for capital expenditure in the manufacturing and infrastructure sector and classified as special mention accounts or non-performing assets, under any one-time settlement arrangement with lenders.
“Lender banks are also permitted to sell, through assignment, such loans to eligible ECB lenders,” the RBI said, adding that such a move would, however, need to comply with all other norms of the broad ECB framework.
