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The Reserve Bank of India has thrown a lifeline to Indian companies facing difficulty in meeting redemption of foreign currency convertible bonds.
The central bank said it will consider their applications for refinancing their outstanding FCCBs under the automatic route.
A host of terms and conditions have been prescribed by the RBI for refinancing FCCBs. Companies can raise fresh external commercial borrowings (ECBs)/ FCCBs only according to the extant ECB guidelines. The amount of fresh ECB/FCCB cannot exceed the outstanding redemption value at maturity of the outstanding FCCBs.
Companies intending to refinance FCCBs cannot raise fresh ECB/FCCB six months prior to the maturity date of the outstanding FCCBs.
ECB/FCCB beyond $500 million for the purpose of redemption of the existing FCCB will be considered under the approval route, said the RBI.
Restructuring
ECB/FCCB availed for the purpose of refinancing the existing outstanding FCCB will be reckoned as part of the limit of $500 million available under the automatic route as per the extant norms.
Restructuring of FCCBs involving change in the existing conversion price is not permissible, according to the RBI.
Proposals for restructuring of FCCBs without change in conversion price will, however, be considered under the approval route depending on the merits of the proposal.
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