In News:

• National Solar Energy Federation of India (NSEFI), a non-profit organisation, has written to the Prime Minister’s Office requesting to direct the Reserve Bank of India (RBI) to rationalize the new ECB framework suitably, excluding repayment of rupee loans from the negative list.

Explained:

• Till recent past, RBI allowed the external borrowing in the form of security bond/loan in U.S. dollars to replace the Indian rupee loans having tenure of 10 years or more given by domestic banks/financing institutions. As per this notification, erstwhile tracks I and II are merged as ‘foreign currency denominated ECB’ and track III and rupee denominated bonds framework are combined as ‘rupee denominated ECB’ to replace the current four-tiered structure.

What is the Grievance?

• However, the existing permissible end use of repayment /refinancing of rupee loan availed under track-II of ECB has not been considered in the merged foreign currency ECB framework in any form therefore, the repayment of rupee loan to domestic lenders by solar/wind project developers from ECB proceeds would not be possible.

Demands:

• Reserve Bank of India to carve out a special category like erstwhile track-II with ECB having minimum average maturity period of five years and above within the new merged foreign currency ECB category to permit solar/wind project developers for repayment of their rupee loans to domestic lenders from ECB proceeds.