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RBI relaxes ECB norms for infra companies

Press Trust of India  |  Mumbai 

The Reserve has liberalised the norms governing foreign borrowings for infrastructure creation "in consultation with the Government".

The minimum average maturity requirement for ECBs (external commercial borrowings) in the infrastructure space raised by eligible borrowers has been reduced to three years from earlier five years, a notification said.

Additionally, the average maturity requirement for mandatory hedging has been reduced to five years from earlier ten years, the announced.

The provisions have been reviewed and decisions taken "in consultation with the Government of India," it added.

The move comes amid concerns surrounding the availability of funds following a liquidity squeeze and the difficulties being faced by non-lenders, especially those facing asset liability issues due to heavy reliance on short term funding for long term assets.

This, along with defaults by infra lender IL&FS, has hurt the credit markets.

The Government has been unequivocal in suggesting remedial measures which will address the needs of the

Some measures reportedly suggested by the Government include a special window for NBFCs, and the RBI does not seem to be amenable for undertaking the measures.

The relaxations in the norms follow other moves by the RBI, including last week's permission to banks to use credit enhancement to help NBFCs raise medium to long term funds.

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

First Published: Wed, November 07 2018. 19:00 IST