What changed
The automatic route ECB borrowing limit for NBFC-IFCs has been increased from 50% to 75% of owned funds, including outstanding ECBs. The mandatory currency hedging requirement has been reduced from 100% to 75% of the exposure.
What it means for you
NBFC-IFCs can now access more foreign debt without prior RBI approval, easing their funding for infrastructure on-lending. The lower hedging requirement reduces cost and complexity, but banks must still ensure compliance with leverage and end-use norms.
What you must do
- Update internal ECB processing guidelines to reflect the new 75% automatic route limit for NBFC-IFCs.
- Adjust hedging compliance checks to the reduced 75% currency risk coverage requirement.
- Continue certifying leverage ratios for NBFC-IFCs under the approval route as per earlier instructions.
- Inform NBFC-IFC clients about the enhanced limit and relaxed hedging norms.
Who it affects
Category-I Authorised Dealer Banks, NBFC-Infrastructure Finance Companies (NBFC-IFCs), Borrowers in the infrastructure sector
What is the new ECB limit for NBFC-IFCs under the automatic route?
The limit has been raised from 50% to 75% of owned funds, including outstanding ECBs. Borrowing beyond 75% requires RBI approval.
Has the hedging requirement changed for NBFC-IFCs?
Yes, the mandatory currency hedging requirement has been reduced from 100% to 75% of the exposure.
Do other ECB policy aspects remain the same?
Yes, all other aspects like eligible borrower, recognised lender, end-use, maturity, all-in-cost, and reporting arrangements remain unchanged.