Deepto Roy & Arvind Ray
The Reserve Bank of India (“RBI”) have been taking active steps to encourage greater foreign lending to the infrastructure sector and allow Indian corporates borrow internationally on more favourable commercial terms than the significantly more expensive domestic debt. The RBI has also been concerned about the fact that most Indian banks have been nearing the limits which have been set on the amount that can be advanced to certain sectors and certain borrower groups. One of the steps which have been taken by the RBI is several amendments to the external commercial borrowing (“ECB”) regulations to give greater flexibility to Indian companies in the infrastrcuture sector to avail of ECBs. This update summarizes the various changes made by the RBI to the External Commercial Borrowings regulations.