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The Reserve Bank of India (RBI) has delegated to banks the power to approve in cases where the average maturity period of fresh external commercial borrowing (ECB) is more than the residual maturity of an existing one. Till now, RBI decided such cases.
It has specified some conditions.. The all-in cost of fresh ECB should be less than that of all-in cost of existing ECB. And, both borrowings should comply with the applicable guidelines. The refinancing in such cases is to be undertaken before the existing ECB matures.
And, the borrower should not be in the default or caution list of RBI and not be under investigation by the directorate of enforcement. Foreign branches or subsidiaries of Indian banks will not be permitted to refinance an existing ECB this way.
This facility will be available even when existing ECB was raised under the approval route, subject to the amount of new ECB being eligible to be raised under the automatic route. All other aspects of ECB policy have been kept unchanged.
