Friday, July 13, 2012

External Commercial Borrowings (ECB) - Repayment of Rupee loans permitted

The Reserve Bank of India (RBI) has decided to allow Indian companies to avail of External
Commercial Borrowings (ECBs) for repayment of Rupee loan(s) availed of from the domestic
banking system and / or for fresh Rupee capital expenditure, under the approval route, subject to
them satisfying the following conditions:-


  • Only companies in the manufacturing and infrastructure sector will be eligible to avail of such ECBs;
  • Such companies shall be a consistent foreign exchange earner during the past three financial years;
  • Such companies are not in the default list/caution list of the Reserve Bank of India; and
  • Such ECBs shall only be utilized for repayment of the Rupee loan(s) availed of for 'capital expenditure' incurred earlier and are still outstanding in the books of the domestic banking system and / or for fresh Rupee capital expenditure.

The maximum permissible ECB that can be availed of by an individual company will be limited to 50
per cent of the average annual export earnings realised during the past three financial years. Authorised Dealer should ensure that the foreign exchange for repayment of ECB is not accessed from Indian markets and the liability arising out of ECB is extinguished only out of the foreign
exchange earnings of the borrowing company.

0 comments:

Post a Comment