RBI allows asset financing NBFCs to access ECB market
As per a notification by the Reserve Bank of India which reviewed the External Commercial Borrowing (ECB) policy, Non-Banking Finance Companies (NBFCs) categorized as Asset Financing Companies (AFCs) by the RBI have been allowed to access the ECB market.
The access is subject to certain conditions, including availing of ECB under the automatic route with minimum average maturity of 5 years to finance import of infrastructure equipment for leasing to infrastructure projects. Besides, NBFC-AFCs availing of ECB through Foreign Currency Bonds (FCB) will be allowed to raise capital only from markets, subject to regulations by the host country complaint with Financial Action Task Force (FATF) guidelines. Such ECBs can be availed up to 75% of owned funds of NBFC-AFCs, subject to a maximum of $200 million or its equivalent per financial year.
ECBs by AFCs above 75% of their owned funds will be considered under the approval route and currency risk of such ECBs is required to be fully hedged. NBFC-Infrastructure Finance Companies (IFCs) are allowed to access ECB for on-lending to infrastructure sector both under automatic and approval routes.