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ECB Norms

GSR Murty (AGM-Finance) (35 Points)

17 December 2008

Dear Sir,

Can any one please provide me the RBI norms for avaling External Commercial Borrowings. My requirement is that, we want to avail a foreign currency loan from our supplier for some specified period. can we do that?

GSR Murty

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2 Replies

Ravikumar.G (Consultant) (18525 Points)
Replied 17 December 2008

The Reserve Bank of India (RBI) has eased the norms for raising funds through external commercial borrowing (ECB) route.

At present, corporates can avail External Commercial Borrowings (ECB) up to USD 500 million during a financial year under Automatic Route with minimum average maturity period of 5 years. With a view to liberalising the ECB guidelines, it has been decided that henceforth, corporates can avail ECB of an additional amount of USD 250 million with average maturity of more than 10 years under the approval route, over and above the existing limit of USD 500 million under the automatic route, during a financial year. Other ECB criteria such as end-use, all-in-cost ceiling, recognised lender, etc. need to be complied with.

Prepayment and call/put options, however, would not be permissible for such ECB up to a period of 10 years.

Further, with a view to providing greater flexibility to the corporates in managing their liquidity and interest costs, prepayment of ECB up to USD 300 million, as against the existing limit of USD 200 million, will be allowed by AD Category - I banks without prior approval of the Reserve Bank subject to compliance with the minimum average maturity period as applicable to the loan.