Rationalise external commercial borrowing norms, says NSEFI

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The NSEFI has sought intervention from the Prime Minister’s Office (PMO) to permit solar and/or wind project developers to repay their rupee loans to domestic lenders from external commercial borrowing (ECB) proceeds.

Notifying the PMO of the issue faced under the new ECB policy framework, NSEFI wrote in a letter, “Till date, RBI allowed the external borrowing in the form of security bond/loan in US dollars to replace the Indian rupee loans having tenure of 10 years or more given by domestic banks/financing institutions.

“As per the [latest RBI] notification, erstwhile tracks I and II are merged as ‘foreign currency denominated ECB’ and track III and rupee denominated bonds framework are combined as ‘rupee denominated ECB’ to replace the current four-tiered structure.”

It continued, “However, the existing permissible end use of repayment/refinancing of rupee loan availed under track-II of ECB has not been considered in the merged foreign currency ECB framework in any form. Therefore the repayment of rupee loan to domestic lenders by solar/wind project developers from ECB proceeds would not be possible.”

NSEFI has requested the PMO “to provide suitable direction/advice to the RBI to carve out a special category like erstwhile track-II with ECB having minimum average maturity period of five years and above within the new merged foreign currency ECB category to permit solar/wind project developers for repayment of their rupee loans to domestic lenders from ECB proceeds.”

“Otherwise, such a new framework would jeopardise the large-scale development of wind and solar power projects in India,” it added.