The Reserve Bank recently allowed
Systemically Important Non-Deposit taking Non-Banking Financial Companies (NBFCs-ND-SI)
to raise funds by issuing Perpetual Debt Instruments that can be included
in their Tier 1 capital. It has now been decided as a temporary measure, to permit
NBFCs-ND-SI to raise short- term foreign currency borrowings, under the approval
route, subject to the following conditions. i) Eligibility: NBFCs-NDSI,
complying with the prudential norms on capital adequacy and exposure norms.
ii) Eligible lenders: Multilateral or bilateral
financial institutions, reputable regional financial institutions, international
banks and foreign equity holders with minimum direct equity holdings of 25 per
cent.
iii) End-use: The resources should be used only
for refinancing of short-term liabilities and no fresh assets should be booked
out of the resources.
iv) Maturity: The maturity of
the borrowing should not exceed three years.
v) Amount: The
maximum amount should not exceed 50 per cent of the Net Owned Funds (NOF)
or USD 10 million (or its equivalent), whichever is higher.
vi)
All-in-cost ceiling: The all-in-cost ceiling should not exceed 6 months
Libor + 200 bps (for the respective currency of borrowing or applicable benchmark). vii)
The borrowings should be fully swapped into Rupees for the entire maturity. NBFC-
ND-SIs proposing to avail of the facility should apply to the Chief General Manager
–in- Charge, Department of Non Banking Supervision (DNBS), Reserve Bank
of India, Central Office, Centre 1, World Trade Centre, Cuffe Parade, Colaba,
Mumbai - 400005 with full details for the necessary approval.
Alpana Killawala
Chief General Manager
Press Release : 2008-2009/602 |