EXTERNAL COMMERCIAL BORROWINGS (ECB) POLICY -TAKE- OUT FINANCE

It has been decided to permit take-out financing arrangement through ECB, under the approval route,
for refinancing of Rupee loans availed of from the domestic banks by eligible borrowers in the sea port and airport, roads including bridges and power sectors for the development of new projects, subject to the following conditions:

• The corporate developing the infrastructure project should have a tripartite agreement with domestic banks and overseas recognized lenders for either a conditional or unconditional take-out of the loan within three years of the scheduled Commercial Operation Date (COD). The scheduled date of occurrence of the take-out should be clearly mentioned in the agreement.
• Minimum average maturity period of seven years.
• Comply with the extant prudential norms.
• The fee payable, if any, to the overseas lender until the take-out shall not exceed 100 bps per annum.
• On take-out, the residual loan agreed to be taken- out by the overseas lender would be considered as ECB and the loan should be designated in a convertible foreign currency and all extant norms relating to ECB should be complied with.
• Domestic banks / Financial Institutions will not be permitted to guarantee the take-out finance.
• The domestic bank will not be allowed to carry any obligation on its balance sheet after the occurrence of the take-out event.
• Reporting arrangement as prescribed under the ECB policy should be adhered to.