Liberalised ECB Access for Infrastructure Companies in India
In a welcome move, the Reserve Bank of India has liberalised the External Commercial Borrowings (ECB) framework in its application to companies in the infrastructure sector (InfraCos). After the introduction of the new ECB framework in November last year (reiterated in January 2016 through the Master Directions), InfraCos could not borrow ECBs in foreign currency unless the minimum average maturity was at least 10 years. This proved difficult for banks given capital allocation requirements. Furthermore lenders with the ability to lend for longer periods at sufficient levels (such as pension funds and sovereign wealth funds) were unable to make up for the shortfall in the short term.