Commercial Borrowing (ECB) policy is constantly reviewed by the Government in
consultation with Reserve Bank of India (RBI) to keep it in tune with the evolving
macroeconomic situation, changing market conditions, sectoral
requirements, the external sector and the lessons of experience.
such review, it has been decided to modulate the capital inflows through ECB by
modifying some aspects of the policy as indicted below:
Henceforth, ECB more than USD 20 million per borrowing company
would be permitted only for foreign currency expenditure for permissible end-uses
of ECB. Accordingly, borrowers raising ECB more than USD 20 million shall park
the ECB proceeds overseas for use as foreign currency expenditure for permissible
end-uses. The above modifications would be applicable to ECB exceeding USD 20
million per financial year both under the Automatic Route and under the Approval
ECB up to USD 20 million per borrowing company would be permitted
for foreign currency expenditure for permissible end-uses under the Automatic
Route and these funds shall be parked overseas and not remitted to India. Borrowers
proposing to avail ECB up to USD 20 million for rupee expenditure for permissible
end-uses would require prior approval of the Reserve Bank under the Approval Route.
However, such funds shall be continued to be parked overseas until actual requirement
All other aspects of ECB policy such as USD 500 million limit
per company per year under the Automatic Route, eligible borrower, recognised
lender, average maturity period, all-in-cost-ceiling, prepayment, refinancing
of existing ECB and reporting arrangements remain unchanged.
These conditions will not apply to borrowers who have already
entered into loan agreement and obtained loan registration numbers from the Reserve
Bank. Borrowers who have taken verifiable and effective steps wherein the loan
agreement has been entered into to avail of ECB in the previous dispensation,
and not obtained the loan registration number, may apply to the Reserve Bank through
their Authorised Dealer.
The above amendment in ECB policy will come into force with
(Release ID :29674)