The Reserve Bank of India today decided to allow External Commercial Borrowings, ECB, for working capital as a permissible end-use for the civil aviation sector on certain conditions.

The notification issued by RBI in Mumbai stated that the overall ECB ceiling for the entire civil aviation sector would be one billion US Dollars and the maximum permissible ECB that can be availed by an individual airline company will be 300 million US Dollars.

This limit can be utilized for working capital as well as refinancing of the outstanding working capital Rupee loans availed of from the domestic banking system. Airline companies desirous of availing of such ECBs for refinancing their working capital Rupee loans may submit the necessary certification from the domestic lenders regarding the outstanding Rupee loans.

The notification also stated that the ECB for working capital should be raised within 12 months from today.