RBI allows hotels to prepay loans through ECBs

Providing relief to hospitality sector, the Reserve Bank today allowed companies owning hotels to prepay loans out of external commercial borrowing proceeds.

"It has been decided to include Indian companies in the hotel sector with a total project cost of Rs 250 crore or more, irrespective of geographical location as eligible borrowers under this scheme," RBI said in a release. Also Read: Recent govt moves to pressurise RBI to ease rates: Ahya
As per the existing guidelines, Indian companies in the manufacturing and infrastructure sector, which are consistent foreign exchange earners, are allowed to avail of external commercial borrowings (ECBs) for repayment of outstanding Rupee loans.
The move will benefit the hotel industry as it will allow the players to raise money overseas and repay loans taken from domestic banks, as well as for capital expenditure. All other aspects of the scheme shall remain unchanged and the amended ECB policy will come into force with immediate effect, RBI said.
The Reserve Bank had earlier relaxed the ECB norms to help companies raise more funds from overseas markets, to boost infrastructure sector funding in the country. Besides, RBI had also relaxed the ECB norms for repayment of rupee loans within the overall ceiling of USD 20 billion.