Regulatory Alert - Relaxation of External Commercial Borrowings (‘ECB’) Norms for Resolution Applicants
08 February 2019
The Reserve Bank of India (‘RBI’) vide a circular (‘RBI Circular’) dated 7 February 2019 has relaxed the ECB guidelines for Resolution Applicants under Corporate Insolvency Resolution Process (CIRP).
The summarised version of the RBI Circular is as follows:
- The extant ECB guidelines provide that the ECB proceeds cannot be utilised for repayment of domestic rupee loans, except when ECB is availed from a Foreign Equity Holder as defined in the aforesaid guidelines
- The said end use restriction has been relaxed for a Resolution Applicant, who is also an eligible borrower under the ECB guidelines
- Now, the eligible Resolution Applicant can raise ECB to repay the domestic rupee loans, under approval route, from the eligible lenders, except from the branches/ overseas subsidiaries of Indian banks
- All the other provisions of ECB guidelines shall remain unchanged
This relaxation will further strengthen the liquidity position of the Resolution Applicants, resulting in faster and more efficient resolution of corporates under CIRP.