RBI allows overseas branches of banks to refinance ECBs
The department of Economic Affairs, Ministry of Finance, government of India along with RBI, monitor and regulate ECB guidelines and policies.
In a major push to Indian banks having overseas branches, the Reserve Bank of India (RBI) on Wednesday decided to permit them to refinane External Commercial Borrowings of corporates, Navratna and Maharatna PSUs by raising fresh ECBs.
Currently Indian corporates are permitted to refinance their existing External Commercial Borrowings (ECBs) at a lower all-in-cost. The overseas branches/subsidiaries of Indian banks are not permitted to extend such refinance.
"In order to provide a level playing field, it has been decided, in consultation with the government, to permit the overseas branches/subsidiaries of Indian banks to refinance ECBs of AAA rated corporates as well as Navratna and Maharatna PSUs, by raising fresh ECBs," said the RBI in fifth monetary policy statement.
Rajnish Kumar, Chairman, SBI said, "The decision in allowing subsidiaries of Indian banks abroad to refinance AAA rated corporates will provide a fair and just opportunity to Indian banks to book and retain good quality assets.”
ECBs are loans sanctioned by non-resident lenders to Indian borrowers like corporates or public sector undertakings (PSU) in the form of foreign currency. The ECBs involve commercial bank loans, buyers' credit, suppliers' credit, securitized instruments such as floating rate notes and fixed rate bonds etc.
The DEA (Department of Economic Affairs), Ministry of Finance, government of India along with Reserve Bank of India, monitor and regulate ECB guidelines and policies.
Meanwhile, the RBI will issue a revised guideline within a week.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
05:45 PM IST