Why all this?
In view of the thrust given to the development of the infrastructure sector, a separate category of NBFCs viz. Infrastructure Finance Companies (IFCs) has been introduced in terms of the guidelines contained in DNBS Notification. In view of the new category of NBFCs being in place, the dispensation provided in “Old Position” below is not considered necessary.
New Position
Accordingly, proposals for External Commercial Borrowings (ECBs) by the IFCs, which have been classified as such by the Reserve Bank, for on-lending to the infrastructure sector, as defined in the extant ECB policy may be considered under the approval route, subject to their complying with the following conditions:
i) compliance with the norms prescribed in the aforesaid DNBS Circular dated February 12, 2010;
ii) hedging of the currency risk in full; and
iii) the total outstanding ECBs including the proposed ECB not exceeding 50 % of the Owned Funds.
Old Position
As per the extant ECB policy, Non-Banking Finance Companies (NBFCs), which are exclusively engaged in financing of infrastructure sector, are permitted to avail of ECB from the recognized lender category including international banks, under the approval route, for on- lending to the infrastructure sector, as defined in the extant ECB policy.
Source: A.P. (DIR Series) Circular No.39 dated 2nd March 2010
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