You are here: Home » News-IANS » Business-Economy
Business Standard

Bidders in insolvency process can go for ECB option: RBI

IANS  |  Mumbai 

In a move to aid the non-performing assets (NPAs), or bad loans, resolution process under the Code, the RBI on Thursday proposed to allow bidders to raise funds through External Commercial Borrowings (ECBs) to enable them to repay their existing lenders.

The of India (RBI)'s Statement on Developmental and Regulatory Policies issued following the fiscal's last bi-monthly monetary policy review announcement noted that under the existing guidelines, the proceeds of ECBs, denominated in either foreign currency or the rupee, are not permitted to be used for repayment or for on-lending for repayment of domestic rupee loans.

The resolution applicants under Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Code (IBC), 2016 may find it attractive to borrow abroad to repay the existing lenders, the statement said.

"In view of the above, it is proposed to relax the end-use restrictions under the approval route of the framework for resolution applicants under CIRP and allow them to utilise the proceeds for repayment of rupee term loans of the target company.

"Your decision gives no room to fly-by-night operators to bring in just for the sake of bringing in There are other openings of bringing in -- we have route, we have FPI (foreign portfolio investor) route," Das said.

Law Tribunal (NCLT) is the in the insolvency cases brought before it after exhausting the out-of-court resolution process with the

"It's a well regulated process and only those companies which have been identified under the resolution process will be able to tap this route," the said.

The RBI guidelines in this regard would be issued by the end of February 2019.

The central also said that as part of the review of FPI investment in corporate done in April 2018, it was stipulated that no FPI should have an exposure of more than 20 per cent of its corporate bond portfolio to a single corporate, "including exposure to entities related to the corporate".

"FPIs were given exemption from this requirement on their new investments till end-March 2019 to adjust their portfolios. While the provision was aimed at incentivising FPIs to maintain a portfolio of assets, further market feedback indicates that FPIs have been constrained by this stipulation," it said.

"In order to encourage a wider spectrum of investors to access the Indian corporate market, it is now proposed to withdraw the exposure limit."

A circular to this effect will be issued by mid-February 2019, the RBI said.

--IANS

bc/nir

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 07 2019. 20:18 IST
RECOMMENDED FOR YOU
RECOMMENDED FOR YOU