RBI eases external commercial borrowings policy, lifts sectoral curbs

The new policy allows all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs.

The Reserve Bank of India (RBI) on Wednesday announced a new external commercial borrowings (ECBs).
 
The new policy allows all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs. 
 
All eligible borrowers can now raise ECBs up to $750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits.
 
"As part of the on-going efforts at rationalising multiple regulations framed under FEMA 1999 over a period of time, the regulations governing all types of borrowing and lending transactions between a person resident in India and a person resident outside India, both in foreign currency and Indian Rupee, have been consolidated and the Revised Regulation FEMA 3 R/2018 has been notified by the Government of India on 17 December 2018," RBI said in a release on Wednesday.
 
As per new framework, "Tracks I and II under the existing framework are merged as “Foreign Currency denominated ECB” and Track III and Rupee Denominated Bonds framework are combined as “Rupee Denominated ECB” to replace the current four-tiered structure. The framework is instrument-neutral."
 
The minimum average maturity period (MAMP) has been kept at 3 years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs as at present, except the borrowers specifically permitted in the circular to borrow for a shorter period.
 
Source: RBI 

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