Current Affairs - Banking - Discussion

The central bank of India, Reserve Bank of India (RBI) in consultation with the government of India, reduced the mandatory hedging provision to 70 per cent from 100 per cent. To ease the External Commercial Borrowing (ECB) norms. This move would enable Indian companies to borrow foreign currency-denominated ECBs for better liquidity as they don't have to have a 100% hedge coverage. However, the ECBs thus raised should be ECBs under Track I, which refers to medium-term borrowings with average maturity between three and five years. Further, ECBs falling within the scope which were raised before have to roll over their existing hedge(s) only to the extent of 70 per cent of outstanding ECB exposure.