In a step aimed at improving dollar inflows amidst deprecating Rupee, the Reserve Bank of India (RBI) has relaxed rules for non-banking finance company-asset finance companies (NBFC-AFCs) to raise external commercial borrowings (ECBs) by allowing the lenders to raise such funds through the automatic route as against the approval route earlier.
However, ECBs (including outstanding external debt) under the automatic route can be availed up to 75% of the AFC's owned funds subject to a maximum of $ 200 million or its equivalent per financial year and borrowing above this limit will be considered under the approval route. Additionally, the currency risk of such ECBs is also required to be fully hedged.
With the new directives NBFC-AFCs can avail ECBs up to $200 million in a financial year to finance import of infrastructure equipment. This ECB can be availed from all recognized lenders with a minimum average maturity of five years.
However, in a rider RBI has said that NBFC-AFCs can avail of ECB in the form of Foreign Currency Bonds, only from those international capital markets that are subject to regulations prescribed by the host country regulator in a Financial Action Task Force (FATF) member country compliant with FATF guidelines and the currency risk of ECBs above 75 per cent of their owned funds is required to be hedged in full.
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: