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Infrastructure cos' ECBs through approval route
Our Bureau
Mumbai Oct 25
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THE Reserve Bank of India on Tuesday said that special purpose vehicles (SPVs), or any other entity notified by the central bank, that are set up to finance infrastructure companies and projects would be treated as financial institutions and ECBs raised by such entities would be considered under the approval route.
In its Credit Policy, RBI said that at present ECB proposals of financial institutions dealing exclusively with infrastructure and export refinance such as Infrastructure Development Finance Co, Power Finance Corporation, Power Trading Corporation, Indian Railway Construction Co and Exim Bank, are considered by RBI on a case-to-case basis under the approval route.
Analysts feel that through this clarification, RBI seems to be keen on a closer monitoring of the ECBs raised by infrastructure development-related SPVs.
As per the clarification in Credit Ppolicy, any SPV or other entities set up to finance such projects will now be treated as financial institutions and go through the regular process for ECB approvals. Analysts feel this would enable RBI to impose some discipline in the raising of ECBs by infrastructure-related SPVs. "I do not think this would cause any delay in SPVs getting access to ECBs. I think it is good for the industry," an industry expert said.
Projects like those related to development or modernisation of airports and special economic zones will come under the purview of this clarification.
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