The Hindu Business Line : NBFCs can raise short-term foreign currency loans

Mumbai, Oct. 31 Non-Banking Financial Companies (NBFCs) have been allowed to raise short-term foreign currency loans to help them meet their short-term liabilities.

In a press release issued on Friday, the Reserve Bank of India said as a temporary measure, non-deposit taking NBFCs have been permitted to raise short- term foreign currency borrowings, under the approval route.

NBFC can borrow up to 50 per cent of their Net Owned Funds or $10 million (or its equivalent), whichever is higher for a maximum period of three years. The all-in-cost ceiling should not exceed 6 months Libor + 200 bps (for the respective currency of borrowing or applicable benchmark). The borrowings should be fully swapped into rupees for the entire maturity.

The borrowed funds should be used only for refinancing of short-term liabilities and no fresh assets should be booked out of the resources, RBI has stipulated.

NFCS can borrow funds from multilateral or bilateral financial institutions, reputable regional financial institutions, international banks and foreign equity holders with minimum direct equity holdings of 25 per cent. However, NBFCs going for overseas borrowing should comply with capital adequacy and prudential norms, the release said.

More Stories on : NBFCs | Overseas Borrowings | RBI & Other Central Banks

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