ECB Policy Liberalised – A Relief For Infrastructure Companies

The much anticipated revisions to the external commercial borrowings (ECB) regime was announced by the Reserve Bank of India (RBI) on 30 November 2015 along with the Master Direction - External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers dated 1 January 2016 (ECB Framework). The ECB Framework had aimed to provide a refined and liberalized regime for ECBs and had permitted a wider category of lenders to participate in lending to Indian borrowers.

However, the modifications in the ECB Framework proved to be restrictive for companies in the infrastructure sector as they were only permitted to avail long term ECBs with a minimum average maturity of 10 years or rupee denominated ECBs with a lower tenor. Taking into account the numerous requests from market players in the infrastructure sector, the RBI through the notification dated 30 March 2016 (Notification) has further