Current Affairs

RBI relaxed ECB norms for corporates and NBFCs

Current context: RBI has liberalised the External Commercial Borrowings (ECBs) both for corporates as well as non-banking finance companies (NBFCs) lenders for easing liquidity.
RBI relaxed ECB norms for corporates and NBFCs
  • The liberalisation on ECBs is applicable for those taken for general corporate purpose loans, repayment of rupee loans and as working capital.
  • The NBFC sector along with several corporates was facing liquidity shortage as were unable to access credit from domestic sources.
  • ECBs having a minimum 7 years average maturity period can now be availed for repayment of rupee loans availed domestically for capital expenditure and for on-lending NBFCs for the same.
  • As per RBI, ECBs with minimum 10 years average maturity period can be used for general corporate purposes, working capital purposes and borrowing by NBFCs.
  • Corporate borrowers will be able to avail of ECBs to repay rupee loans taken for Capital expenditures if they are into infrastructure building or manufacturing and classified as SMA-2 or Non-Performing Asset, Special Mention Account, under any one-time settlement arrangement with lenders.

Question: 

Q.1 As per RBI norms, ECBs with minimum 10 years average maturity period can be used for?
a. General corporate purposes
b. Working capital purposes
c. Borrowing by NBFCs
d. All of them
RBI relaxed ECB norms for corporates and NBFCs RBI relaxed ECB norms for corporates and NBFCs Reviewed by Neha on July 31, 2019 Rating: 5

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