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of <h1>Credit enhancement of rupee infrastructure bonds and IFC issues by nonresident entities subject to provider, tenor, fee and hedging caps</h1> Credit enhancement by eligible non-resident entities is extended to domestic rupee-denominated capital market instruments issued by Indian companies exclusively engaged in infrastructure and by Infrastructure Finance Companies (IFCs) as classified by RBI; effect: such instruments may be credit-enhanced subject to specified conditions. Conditions: only multilateral/regional financial institutions and government-owned DFIs may provide enhancement; effect: restricts provider eligibility. Instruments must have minimum average maturity seven years and no prepayment or call/put options within seven years; effect: enforces tenor and repayment rigidity. Fees/costs capped at 2% of principal; effect: limits upfront charges. On invocation, repayment to guarantor convertible to foreign currency is subject to applicable all-in-cost ceilings by maturity; effect: caps novated loan cost. On default with INR servicing, interest equals bond coupon or 250 bps over prevailing 5-year G-Sec yield, whichever is higher; effect: sets default servicing rate. IFCs must meet eligibility/prudential norms and fully hedge foreign-currency novated loans; effect: imposes compliance and hedging obligations. ECB reporting requirements apply to novated loans; effect: mandates reporting parity with ECBs.
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