INSUBCONTINENT EXCLUSIVE:
Easier norms for companies wanting to raise money through external commercial borrowings (ECBs) is set to open door for a lot of Indian
entities, especially NBFCs, to borrow from abroad and at a lower cost.
Late on Wednesday evening, Reserve Bank of India (RBI) reduced ECB
maturity tenor, increased borrowing limits and removed qualification restrictions for companies wanting to borrow funds from abroad,
boosting chances of these companies to borrow from overseas.
Harry Parikh, associate partner, transaction tax services, BDO India, said
liberalised norms open up opportunity for companies from service sector as well as limited liability partnerships (LLPs) to access
Also, list of eligible lenders has been expanded
Ramifications on Indian lending market will have to be seen because with withdrawing liquidity in industry, this change will automatically
FDI to borrow under ECB framework.
Further, all eligible borrowers can now get funds up to $750 million or equivalent per financial year
under automatic route, replacing existing sector-wise limits
It also set minimum average maturity period at three years for all ECBs regardless of amount.
Previously, companies could only borrow up to
$50 million for three years
lenders from any Financial Access Task Force (FATF)- compliant entity as a recognised lender
This increases options for borrowers
It has been also clarified that housing companies just need to have an affordable housing project and to access funds from abroad
global banking and markets at HSBC India.
It is expected that even lower rated companies will seriously look at ECB as a funding option
