What changed
Previously, IFCs could only access ECBs for on-lending to infrastructure under the approval route. Now, they can raise ECBs up to 50% of their owned funds under the automatic route, provided they meet existing prudential norms. ECBs exceeding this threshold still require RBI approval.
What it means for you
This liberalisation gives IFCs faster, less bureaucratic access to foreign funds for infrastructure lending, reducing approval delays. Banks acting as AD Category-I must verify compliance with prudential guidelines when certifying ECB applications under both routes. The move supports infrastructure financing without loosening overall ECB caps or other policy guardrails.
What you must do
- Update internal ECB processing guidelines to reflect the automatic route for IFCs up to 50% of owned funds.
- Verify IFCs' owned funds and prudential compliance before certifying ECB applications under the automatic route.
- Continue routing ECB applications above 50% of owned funds through the approval route to RBI.
- Communicate this change to IFC clients and relevant business units handling ECB transactions.
Who it affects
Category-I Authorised Dealer Banks, Infrastructure Finance Companies (NBFC-IFCs), Borrowers in the infrastructure sector
What is the new automatic route limit for IFCs under ECB?
IFCs can now raise ECBs up to 50% of their owned funds under the automatic route, subject to prudential norms. Amounts above this require RBI approval.
Does this circular change the USD 500 million annual limit per company?
No, the USD 500 million limit per company per financial year under the automatic route remains unchanged, along with other ECB policy aspects.
What must AD Category-I banks do when processing IFC ECB applications?
Banks must ensure compliance with prudential guidelines and certify applications correctly under either the automatic or approval route, as applicable.