The Hindu Business Line : `Allow NBFCs free access to ECBs'

THE non-banking financial companies (NBFCs) should be allowed to access external commercial borrowings (ECBs) freely, says the Associated Chamber of Commerce and Industry of India.

The NBFCs are now allowed to access only through the `approval route', which is "time consuming and leaves possibility for discrimination," says the chamber. It also says that at a time when the Government wants speedy infrastructure development, access through the approval route holds little merit.

Currently, NBFCs are allowed to use ECBs for import of infrastructure equipment for onward leasing, with minimum average maturity of five years. The chamber suggests that the Government reduce the minimum average maturity to three years as equipment financing usually involves an average maturity of three years.

NBFCs can currently raise ECBs for import of infrastructure equipment for onward leasing to infrastructure projects, and not for direct funding of infrastructure projects. But the chamber says addressing one area of infrastructure financing i.e., equipment, while leaving out the other area i.e., project will not result in better infrastructure in the country. It is the infrastructure projects that need long-term funding for 10-12 years.

The chamber says NBFCs should be allowed to access ECBs for funding of both equipment and projects.

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