May 01, 2018
RBI introduced changes in the existing ECB and Masala Bonds Framework
RBI has, vide the attached circular dated April 27, 2018, introduced changes in the existing ECB and Masala Bonds Framework.
The major changes brought in by this circular are as under:
1. Rationalisation of all-in-cost for ECB under all tracks and Rupee denominated bonds (RDBs):
A uniform all-in-cost ceiling of 450 basis points over the benchmark rate has been stipulated. The benchmark rate will be 6 month USD LIBOR (or applicable benchmark for respective currency) for Track I and Track II, while it will be prevailing yield of the Government of India securities of corresponding maturity for Track III (Rupee ECBs) and RDBs.
2. Revisiting ECB Liability to Equity Ratio provisions:
The ECB Liability to Equity Ratio for ECB raised from direct foreign equity holder under the automatic route has been increased up to 7:1 in certain cases.
3. Expansion of Eligible Borrowers’ list for the purpose of ECB: HFCs are now eligible borrowers of ECBs under all tracks.
4. Rationalisation of end-use provisions for ECBs: Currently, a positive end-use list is prescribed for Track I and specified category of borrowers, while negative end-use list is prescribed for Track II and III. It has now been decided to have only a negative list for all tracks.
Please refer to the attached circular for more details.
For any details and clarifications, please feel free to write to: