RBI’s Move to Liberalise Overseas Borrowing Norms for Infrastructure Companies Is Not Satisfactory – Government
The government reckons the Reserve Bank of India’s move to liberalise overseas borrowing norms for infrastructure companies and some relaxations for liquidity-challenged non-banking finance companies (NBFCs) haven’t gone far enough.
It will press for more extensive measures at the next board meeting on November 19, according to aperson familiar with the matter. The change in external commercial borrowing (ECB) norms is seen as the implementation of just a small part of the package the central bank had committed to putting in place and the woes of NBFCs won’t be adequately addressed through these latest steps, the person said.
The government had also been hoping RBI would approve a $30-billion fund-raising plan by state-owned banks in order to drive credit growth. RBI last week reduced the minimum average maturity requirement for infrastructure sector ECBs to three years from five and halved the average maturity requirement for mandatory hedging to five years.
It had earlier allowed banks to provide partial credit enhancement (PCE) to bonds issued by the systemically important, nondeposit-taking NBFCs. The measures are aimed at helping these two sectors raise funds more easily.