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RBI revises norms on ECBs
Mumbai, Nov 14: Following government`s decision to tighten external commercial borrowings norms, Reserve Bank of India today issued revised guidelines prohibiting financial intermediaries like banks, development financial institutions and non-banking financial companies from raising funds through ECBs.
Mumbai, Nov 14: Following government's decision to tighten external commercial borrowings norms, Reserve Bank of India today issued revised guidelines prohibiting financial intermediaries like banks, development financial institutions and non-banking financial companies from raising funds through ECBs.
"No financial intermediary - a bank, DFI or NBFC – will be allowed access to ECBs, either under automatic, or RBI or government routes and neither they can provide guarantees in favour of overseas lenders, on behalf of their clients for ECBs being raised by them", the apex bank said here in a notification.
These revisions would be for a temporary period, until further review, the apex bank added.
RBI said only those co-operative societies which are commercial in nature and whose books of accounts are up to date and have complied with the statutory audit provisions without any qualifications would be eligible to raise ECBs.
ECBs exceeding USD 50 million would be permitted to finance import of equipment and to meet foreign exchange needs of infrastructure projects in sectors like power, telecom, railways, ports, industrial parks and urban infrastructure.
Existing guidelines on end-use would be applicable for ECBs under the automatic route, it said.
In cases where ECBs have been raised for meeting rupee expenditure under automatic route, the authorised dealer has to ensure that the forex exposure of the borrower was hedged unless there was a natural hedge in the form of uncovered foreign exchange receivables, it added.
Bureau Report
These revisions would be for a temporary period, until further review, the apex bank added.
RBI said only those co-operative societies which are commercial in nature and whose books of accounts are up to date and have complied with the statutory audit provisions without any qualifications would be eligible to raise ECBs.
ECBs exceeding USD 50 million would be permitted to finance import of equipment and to meet foreign exchange needs of infrastructure projects in sectors like power, telecom, railways, ports, industrial parks and urban infrastructure.
Existing guidelines on end-use would be applicable for ECBs under the automatic route, it said.
In cases where ECBs have been raised for meeting rupee expenditure under automatic route, the authorised dealer has to ensure that the forex exposure of the borrower was hedged unless there was a natural hedge in the form of uncovered foreign exchange receivables, it added.
Bureau Report