EXCHANGEABLE BONDS CLUBBED UNDER ECB LTD

Exchangeable Bonds ( EBs ), which announced in the Budget as major instrument for India Inc to unlock the value of stakes in group firm, will have curbs on a par with External Commercial Borrowings ( ECBs ), if issued abroad. Put simply, a company will be able to tap overseas funds either through the EB or ECB window within the overall cap of $500 million. The overall annual cap for ECBs is $22 billion for the current financial year. “Broadly, guidelines for exchangeable bonds will be on the lines of those for ECBs, with some differences. To begin with, EBs can be issued within the ex listing ceiling applicable for ECBs,” EBs are expected to have a maturity period of 3-5 years, similar to that for ECBs.