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RBI Relaxes ECB Norms For Infrastructure Companies

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The Reserve Bank of India has liberalised the norms governing foreign borrowings for infrastructure creation "in consultation with the government".

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

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

Also Read: RBI Allows Partial Credit Enhancement Of NBFC Bonds

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

This, along with defaults by Infrastructure Leasing & Financial Services, has hurt the credit markets.

The government has been unequivocal in suggesting remedial measures which will address the needs of the economy.

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.

Also Read: Why The Government Thinks The RBI Has Rs 3.6 Lakh Crore In Excess Capital

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