ECB Norms for NBFC Funding

New ECB norms for NBFC Funding

In a recent development, the RBI issued new guidelines for EECP Norms for NBFC in NBFC funding.

The RBI has allowed external commercial borrowings for working capital purposes, general corporate purposes and repayment of bank loans. Borrowing for on-lending (Loan to lend money to the third party) by NBFCs for the above mention maturity and end-uses is also permitted. The step is taken to grant long term availability of funds to Non-Banking Financial Companies (NBFCs). However, the ECB’s should be raised from eligible lenders except for foreign branches/ overseas subsidiaries of Indian banks. Earlier in its order issued as on 26 March 2019, it debarred ECB proceeding to be used for the working capital purposes, repayment of bank loans. The solution to NBFC problem of mismatch of assets and liabilities is the highlight of this notification.

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