The Reserve Bank of India has allowed banks to reschedule external commercial borrowing (ECB) dues to Indian companies, following changes in the drawdown schedule and repayment.
The facility will be available for ECB raised both under the automatic and approval routes. RBI has delegated power to banks as a step to simplify procedures.
Earlier, prior RBI approval was necessary for elongation and rollover in the repayment, on expiry of the original maturity of the ECB.
Banks can permit re-schedulement on certain conditions. Any change in all-in-cost should be only due to change in the average maturity period, after the rescheduling. There should not be any increase in the rate of interest and no additional cost should be involved.
The rescheduling is allowed only once, before the maturity of the ECB. If the lender is a foreign branch of a domestic bank, they should comply with the prudential norms applicable to rescheduling.
RBI said Indian companies were barred from raising ECB from foreign branches or subsidiaries of Indian banks to refinance or repay rupee loans raised from the domestic banking system. The ban is also applicable for repayment of existing rupee loans for companies in the infrastructure sector and for spectrum allocation.