External Commercial Borrowings Policy Liberalised

Reserve Bank of India (“RBI”) has released a circular on September 19, 2018 in order to liberalise some aspects of the External Commercial Borrowings (“ECB”) policy which is as follows.

  • ECBs by companies in manufacturing sector: As per the earlier norms, eligible borrowers were allowed to raise ECB up to USD 50 million or its equivalent with minimum average maturity period of 3 years. It has been decided to allow eligible ECB borrowers who are into manufacturing sector to raise ECB up to USD 50 million or its equivalent with minimum average maturity period of 1 year.
  • Underwriting and market making by Indian banks for Rupee Denominated Bonds (RDB) issued overseas: Earlier, Indian banks were allowed to act as arranger and underwriter for RDBs issued overseas and in case of underwriting an issue, their holding could have not been more than 5 % of the issue size after 6 months of issue. It has now been decided to permit Indian banks to participate as arrangers/underwriters/market makers/traders in RDBs issued overseas subject to applicable and existing prudential norms.