Question : External Commercial Borrowings

*168: Shri. J.J.T. NATTERJEE

Will the Minister of FINANCE be pleased to state:
(a) whether the Government has recently liberalized norms governing External Commercial Borrowings (ECBs) for infrastructure creation;
(b) if so, the details thereof;
(c) whether the move comes amid concerns surrounding availability of funds following liquidity squeeze and the difficulties being faced by non-bank lenders, especially those facing asset liability issues due to heavy reliance on short-term funding for long-term assets; and
(d) if so, the details thereof?

MINISTER OF FINANCE
(SHRI ARUN JAITLEY)

(a) to (d): A statement is laid on the Table of the House.

*****

STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. *168 RAISED BY SHRI. J.J.T. NATTERJEE, HON’BLE MEMBER OF PARLIAMENT TO BE ANSWERED ON 21.12.2018 REGARDING “EXTERNAL COMMERCIAL BORROWINGS”.

(a) &(b): Yes Madam.Reserve Bank of India (RBI), in consultation with Government of India (GoI), has liberalised External Commercial Borrowing (ECB) normsfor infrastructure sector. The specific measures taken are:-
(i) The minimum average maturity requirement for ECB raised by companies in infrastructure sector has been reduced from 5 years to 3 years irrespective of the amount of borrowing.

(ii) The minimum average maturity requirement has been reduced from extant 10 years to 5 years for mandatory hedging provision applicable to ECB raised by eligible corporates from infrastructure sector.

(iii) For the ECB raised with minimum average maturity period of 3 to 5 years for infrastructure, it has been stipulated that, the corporates will have to meet 70% mandatory hedging requirement instead of earlier 100%.
(c) and d): No Madam. Liberalisation of ECB norms for infrastructure is not related to concerns surrounding availability of funds following liquidity squeeze experienced since September and consequential difficulties faced by many non-bank lenders.
*****