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The Reserve Bank of India (RBI) has provided banks more power to reschedule and restructure external commercial borrowing (ECB) of Indian companies.
Banks have been empowered to make changes to the name of the ECB lender, after satisfying themselves on the authenticity of such transactions.
RBI said banks had to ensure the ECB continued to be in compliance with the guidelines. The new norms will be applicable to ECBs raised under the automatic and approval routes. Foreign currency convertible debentures will not be covered.
Under the revised norms, banks can make changes and modifications in the draw-down and repayment schedules. This could involve changes in the average maturity period and an increase/decrease in the all-in-cost. The revised average maturity period and the terms of the all-in-cost have to be in conformity with the applicable ceilings.
If the lender is a foreign branch/subsidiary of an Indian bank, the changes will be subject to the prudential norms.
Banks can also allow transfer of the ECB from a company to another on account of re-organisation at the borrower’s level, which could be in the form of a merger, demerger, amalgamation or acquisition. Dealing banks have to be assured that the company acquiring the ECB is an eligible borrower and adhere to guidelines.
