Monetary Policy: RBI Eases Overseas Borrowing Norms For Bidders Of Insolvent Companies
Bidders for insolvent companies can borrow from ECB window to repay domestic debt
The Reserve Bank of India eased overseas borrowing norms for bidders of stressed assets under the Insolvency and Bankruptcy code.
Such bidders, or resolution applicants, will be allowed to utilise external commercial borrowing proceeds to retire rupee term loans of the insolvent companies they intend to buy, the central bank said in its developmental and regulatory policies. “Such ECBs could be availed from all eligible lenders under the extant ECB framework except from overseas branches/subsidiaries of Indian banks.”
Under the existing framework, ECBs were not permitted to be utilised for on-lending for repayment of domestic rupee loans. Detailed guidelines on the eased rules will come out at the end of the month.
The move comes after the central bank on Jan. 16 announced a new ECB framework to improve the ease of doing business. It expanded the list of eligible borrowers and increased lending options.