PSU Watch logo

| RailTel bags an order worth Rs 11.99 crore from Cotton Corporation |   | Govt, EIB sign contract for 2nd tranche of Euro 150 million for Pune Metro Rail project |   | ADB to end financing for coal mining, oil & natural gas activities |   | Vaccine Maitri: India to receive between 190-250 mn fully subsidised Covid vaccines, said Gavi |   | Rupsi Airport in Assam to start operations from Saturday under UDAN |  

Speedy Resolution Under IBC On Cards Now As RBI Changes Stance

PW Bureau 

This announcement is viewed as a special provision to accelerate the resolution under the IBC, as RBI had not permitted foreign funds to repay rupee loans in the new ECB guidelines announced last month New Delhi: With an aim to smoothen the resolution process under the Insolvency and Bankruptcy Code (IBC), the Reserve Bank of India plans to allow bidders to raise funds through external commercial borrowings (ECBs) to repay existing lenders. This announcement is being viewed as a special provision to accelerate the resolution under the IBC, as RBI had not permitted foreign funds to repay rupee loans in the new ECB guidelines announced last month. But now bidding companies can raise foreign currency funds via foreign banks abroad and use these proceeds to repay rupee loans, RBI said.

Relaxation of ECB framework

“The resolution applicants under Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code (IBC), 2016 may find it attractive to borrow abroad to repay the existing lenders,” RBI said. “In view of the above, it is proposed to relax the end-use restrictions under the approval route of the ECB framework for resolution applicants under the CIRP and allow them to utilise the ECB proceeds for repayment of Rupee term loans of the target company.” Such ECBs could be availed from all eligible lenders under the extant ECB framework, except for overseas branches/subsidiaries of Indian banks, the RBI release said, adding that guidelines in this regard will be issued by the end of this month. SBI Chairman Rajnish Kumar said the ECB route for applicants under the IBC could facilitate the resolution process.