Mumbai: The Reserve Bank Monday relaxed norms for external commercial borrowings (ECBs) by reducing the mandatory hedging provision to 70 percent from the current 100 percent.
The relaxed norms will apply to the ECBs with a maturity period between 3 and 5 years, the central bank said in a notification.
"On a further review of the extant provisions, it has been decided, in consultation with the Government of India, to reduce the mandatory hedge coverage from 100 percent to 70 percent for ECBs raised under Track I of the ECB framework..." it said.
Further, the RBI also clarified that the ECBs raised prior to this circular will be required to mandatorily roll over their existing hedge only to the extent of 70 percent of outstanding ECB exposure.
According to the RBI, Track I refers to medium-term foreign currency-denominated ECB with a minimum average maturity of 3-5 years.
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Updated Date: Nov 26, 2018 20:03:30 IST