Banks asked to verify financial position of infra funds planning to borrow overseas

25 Jan 2012

1

The Reserve Bank of India (RBI) has advised authorised dealer banks to verify existing liabilities and owned funds of infrastructure finance companies (IFCs) before they are allowed to tap external commercial borrowings (ECBs). 

This is being done to avoid the IFCs from taking recourse to excessive leveraging that may lead to a piling up of debt by these non-banking financiers.

Non-banking finance companies categorised as infrastructure finance companies (IFCs) should get their leverage ratio (ie, outside liabilities/owned funds) certified by the designated Category 1 authorised dealer banks for availing external commercial borrowing (ECBs), RBI said in a notification today.

All other aspects of the ECB policy, such as eligible borrower, recognised lender, maximum permissible limit under the automatic route, average maturity, all-in-cost, end-use, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged, RBI said.

As per the extant guidelines, non-banking finance companies (NBFCs) categorised as infrastructure finance companies (IFCs) by the RBI and complying with the prescribed norms are permitted to avail of ECBs, including the outstanding ECBs, up to 50 per cent of their owned funds under the automatic route.

ECBs by IFCs above 50 per cent of their owned funds are being considered under the approval route. The permitted end-use should be for on-lending to the infrastructure sector, as defined under the extant ECB policy.

Business History Videos

History of hovercraft Part 3 | Industry study | Business History

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2 | Industry study | Business History

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1 | Industry study | Business History

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | Industry study | Business History

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more
View details about the software product Informachine News Trackers