Minimum Maturity Period of ECBs Reduced

Reserve Bank of India (“RBI”) has liberalized the External Commercial Borrowing (“ECB”) Policy by amending the ‘Master Direction on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers’. The changes are as follows:

  • The minimum average maturity period of ECBs in infrastructure sector has been reduced from five (5) years to three (3) years; and
  • The average maturity period requirement to claim exemption from mandatory hedging provision applicable to ECBs has been reduced from ten (10) years to five (5) years.

Accordingly, ECBs in infrastructure sector, with minimum average maturity period of less than 5 years, shall have to meet 100% mandatory hedging requirement.