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Last week RBI unleashed a new framework for borrowing by Indian corporates from the international markets. In the first look, the overhaul looks a big shift with changes such as lower tenor, expanded list of eligible borrowers, practically no restrictions on the type of lenders etc. However, on a detailed study, one would realise that RBI had started relaxing rules in 2018 itself with a series of changes between April & Nov. Along with the new changes made now, the policy looks like more of a consolidation. Attached is a tabular study of all the key changes made since 2018 for manufacturing and infrastructure companies under Track I and II.

The big question is whether new debt capital will really get pumped into the country with these changes. Till the start of a new capex cycle, the market will remain dominated with refinancing transactions. One of the industry’s demands of allowing refinancing of rupee loans from ECB is yet to be heard.

We will watch this space closely. Looking forward to your comments.

ECB GUIDELINE

Author Rajesh Bhura
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