ANNOUNCED AS TEMPORARYNo
Controls on credit operations
On 20 October 2016, the Reserve Bank of India relaxed the conditions under which Indian companies may access foreign credit.
Through RBI/2016-17/92 A.P. (DIR Series) Circular No. 8, the RBI allowed certain Authorized Dealer (AD) banks to approve requests from borrowers to extend matured but unpaid External Commercial Borrowings (ECBs), providing necessary conditions are fulfilled. Further, AD banks are also authorized to approve cases of conversion of matured and unpaid ECBs into equity. Earlier, AD banks were allowed such approvals only if such requets had been made during the tenure of the borrowings.
Through ECBs, Indian companies and Public Sector Undertakings can access funds from abroad. According to the Reserve Bank of India, ECBs refer to commercial loans in the form of bank loans, securitised instruments, buyers' credit and suppliers' credit availed of from non-resident lenders with a minimum average maturity of 3 years.
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