RBI announces new framework for external commercial borrowings

Previously, the RBI had only allowed companies to borrow up to $50 million for three years. For funds beyond $50 million companies had to borrow for at least five years.

"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," RBI said in a statement.

RBI has expanded the list of eligible borrowers and all entities eligible to receive foreign direct investment can borrow under the ECB framework.

"Any entity who is a resident of a country which is FATF (Financial Action Task Force ) or IOSCO (International Organisation of Securities Commissions) compliant will be treated as a recognised lender. This change increases the lending options and allows various new lenders in ECB space while strengthening the AML/CFT framework," the central bank said.

The minimum average maturity period (MAMP) has been kept at three 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, RBI added.