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RBI reduces hedging provision for external commercial borrowings to 70%

The relaxed norms will apply to the ECBs with a maturity period between 3 and 5 years

Press Trust of India  |  Mumbai 

RBI
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The (RBI) Monday relaxed norms for (ECBs) by reducing the mandatory to 70 per cent from the current 100 per cent.

The relaxed norms will apply to the ECBs with a maturity period between 3 and 5 years, the central bank said in a notification.

"On a further review of the extant provisions, it has been decided, in consultation with the Government of India, to reduce the mandatory hedge coverage from 100 per cent to 70 per cent for ECBs raised under Track I of the ECB framework..." it said.

Further, the RBI also clarified that the ECBs raised prior to this circular will be required to mandatorily roll over their existing hedge only to the extent of 70 per cent of outstanding ECB exposure.

According to the RBI, Track I refers to medium-term foreign currency-denominated ECB with a minimum average maturity of 3-5 years.

First Published: Mon, November 26 2018. 19:25 IST
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