02 October 2010
External commercial borrowing (ECB) is a loan in foreign currency which indian cos can raise from abroad. This loan is priced in terms of a spread over LIBOR and is serviced in that foreign currency only.
RBI has put several restricttions on ECBs as regards the rate of interest and remittance of proceeds.
There are two ways by which ECBs can be raised. 1st is automatic route where if the borrower satisfies RBI's criteria it need not take RBIs permission for the loan. 2nd is approval route where borrower has to take RBI's permission before raising the loan.
RBI releases figures related to ECBs on a monthly basis. More information regarding the same can be obtained from RBI's website.
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