Is ECB allowed in real estate?
The government has said companies can use proceeds from external commercial borrowings to invest in the real-estate of other domestic companies. However, the funds cannot be used to acquire stakes in those companies.
What are the items of permitted end use for which ECB can be raised?
Eligible borrowers are also allowed to raise ECB for repayment of Rupee loans availed domestically for capital expenditure in manufacturing and infrastructure sector if such is classified as a special mention account 2 (that is, a loan or an advance where the principal or the interest payment is overdue between 61-90 …
Is RBI approval required for ECB?
Loan Registration Number (LRN): Any draw-down in respect of an ECB should happen only after obtaining the LRN from the Reserve Bank. To obtain the LRN, borrowers are required to submit duly certified Form ECB, which also contains terms and conditions of the ECB, in duplicate to the designated AD Category I bank.
What are the RBI norms on ECBs?
According to RBI, ECBs with a minimum average maturity period of 10 years can be used for working capital purposes and general corporate purposes and borrowing by NBFCs for the above maturity for on lending for the above purposes is also permitted.
Is prepayment of ECB allowed?
Prepayment of ECB up to USD 400 million may be allowed by AD banks without prior approval of RBI subject to compliance with the stipulated minimum average maturity period as applicable to the loan. The borrower must obtain a Loan Registration Number (LRN) from the Reserve Bank of India before drawing down the ECB.
Who can take ECB?
Under the New ECB Framework, the list of Eligible Borrowers has been expanded to include all entities eligible to receive FDI. Thus, an Indian company, an Indian LLP operating in a sector where FDI under automatic route up to 100% is permitted and including start-up companies are eligible for ECB.
What is LRN in ECB?
Borrowers may enter into loan agreement complying with the ECB guidelines with recognised lender for raising ECB under Automatic Route without the prior approval of the Reserve Bank. The borrower must obtain a Loan Registration Number (LRN) from the Reserve Bank of India before drawing down the ECB.
Who can borrow from ECB?
(b) Corporates in infrastructure sector {as defined in paragraph 1(A) (v) (a)} can avail ECB up to USD 100 million and Corporates in industrial sector can avail ECB up to USD 50 million for Rupee capital expenditure for permissible end- uses within the overall limit of USD 500 million per borrower, per financial year.
What is all-in-cost ceiling for ECB?
The all-in-cost ceiling for ECBs with average maturity of three and up to five years is at 6 months London interbank offer rate (Libor) plus 350 basis points (3.5 per cent). For ECB of more than five years, it is 6 months Libor plus 500 basis points (5 per cent).
Can ECB be repayment before maturity?
In case of an ECB raised from foreign equity holder and utilized for general corporate purpose/working capital/repayment of Rupee loans, can repayment of principal of ECB start before the completion of 5 years? Yes, however, the ECB should have minimum average maturity period of 5 years.
Can ECB be interest free?
Maximum interest that can be paid is Benchmark rate plus 450 bps spread. No minimum interest to be paid is specified. Hence, considering the parent – subsidiary relation, ECB in the form of loan can be interest free.
What is end use in ECB?
ECB end-use restrictions for all eligible borrowers
| Sr. No. | Category | MAMP |
|---|---|---|
| (a) | ECB raised by manufacturing companies up to 50 millions or its equivalent per financial year. | 1 year |
| (b) | ECB Raised from foreign equity holder for working capital purposes, general corporate purposes or for repayment of Rupees Loans. | 5 years |
Which is the latest RBI circular on ECB?
Under A.P. (DIR Series) Circular 04 of RBI dated 30 th July 2019 (“ ECB Circular ”) [1], the end-use provisions have been amended. As part of the Central Government’s aim to improve ease of doing business in India, the RBI on 16 th January 2019 notified a new external commercial borrowings framework (“ New ECB Framework ”) [2] .
Are there any restrictions on ECB in India?
Only a small negative list of end-use restrictions applicable in case of long-term ECB and INR denominated ECB; Alignment of the list of infrastructure entities eligible for ECB with the Harmonised List of the Government of India. 3.
When does new ECB framework come into force?
10. The new ECB framework will come into force from the date of publication, in the Official Gazette, of the relative Regulations issued under FEMA. These Regulations are being issued separately. 11. Authorised Dealer banks may bring the contents of this Circular to the notice of their constituents and customers.
When to raise ECB loan under extant framework?
Entities raising ECB under extant framework can raise the said loans by March 31, 2016 provided the agreement in respect of the loan is already signed by the date the new framework comes into effect.