Wednesday, August 14, 2013

Asset financing NBFCs can raise ECB under automatic route

The Reserve bank of India (RBI) has said that NBFC-AFCs are allowed to avail of ECB under the automatic route from all recognised lenders as per the extant ECB guidelines with minimum average maturity period of five years. In cases, where the NBFC-AFCs avail of ECBs in the form of Foreign Currency Bonds from international capital markets compliant with FATF guidelines, the same can be availed up to 75 per cent of owned funds of NBFC-AFCs, subject to a maximum of USD 200 million or its equivalent per financial year. Also, above 75 per cent of their owned funds will be considered under approval route by Reserve Bank. However, the currency risk of such ECBs is required to be
hedged in full.

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