What are the hedging requirements under External commercial borrowing?






Farooq Farooq
Answered on February 14,2020

Companies in infrastructure sector, Non-Banking Financial Companies -Infrastructure Finance Companies (NBFC-IFCs), NBFCs-Asset Finance Companies (NBFC-AFCs), Holding Companies and Core Investment Companies (CICs) are eligible borrowers. These companies are required to:

  1. Have a board-approved risk management policy and will require to keep their ECB exposure hedged 100 per cent at all times in case the average maturity is less than 5 years.
  2. Further, the designated AD Category-I bank shall verify that 100 per cent hedging requirement is complied with during the currency of ECB and report the position to RBI through ECB 2 returns.
  3. Lastly, the entities raising ECB under the provisions of tracks I and II are required to follow the guidelines for hedging issued, if any, by the concerned sectoral or prudential regulator in respect of foreign currency exposure.

For more information, click here.


tesz.in
Hey , can you help?
Answer this question

Guide

How to set up a business in India from scratch?

Setting up a Business in India involves the following steps Choosing the type of business Business Registration Process Central and State level Approvals / Compliances Wi..
  Click here to get a detailed guide