The Reserve Bank of India relaxed rules for rescheduling/restructuring of ECBs by permitting an increase in the total cost of borrowing offshore. In suppression of earlier provisions, the banking regulator has delegated powers to the designated AD category-I banks to allow changes/modification in the draw-down and repayment schedules notwithstanding the average maturity period or changes…
With a view to providing greater flexibility for structuring of External Commercial Borrowings (ECB) arrangements, it has been decided by RBI that all recognised non-resident ECB lenders may extend loans in Indian Rupees by mobilising Indian Rupees through swaps undertaken with an Authorised Dealer Category I bank in India. At present all eligible borrowers are…
The revised guidelines on External Commercial Borrowing are as per the updated circular of RBI as of December 22, 2023. In simple terms, External Commercial Borrowings (ECB) means commercial borrowings availed (in the form of bank loans, trade credits, and securitized instruments) from external sources (from abroad) with a minimum average maturity of three years.…
The extant ECB guidelines allow the local borrower to offer security to the overseas lender / supplier for securing ECB. According to the latest directions of RBI, AD Category-I banks may allow creation of charge on immovable assets, movable assets, financial securities and issue of corporate and / or personal guarantees in favour of overseas…
Export finance plays a pivotal role in facilitating international trade by providing exporters with the necessary financial resources to manage the production, shipment, and delivery of goods and services to overseas markets. It helps bridge the time lag between incurring export-related costs and receiving payment from foreign buyers, thereby supporting liquidity and sustaining trade momentum.…
On June 27, 2019, Reserve Bank of India notified all the banks (SCBs, SBs, LABs), excluding RRBs that the RBI is receiving complaints from exporters and their Associations that the banks are not extending the benefits under the Gold Card Scheme as per extant instructions. The Central bank therefore reiterated that the instructions relating to…
Exporters in India operate within a regulatory ecosystem shaped primarily by the Foreign Exchange Management Act (FEMA), 1999, and the Foreign Trade Policy (FTP) of the Directorate General of Foreign Trade (DGFT). These regulations govern critical aspects of export operations, including currency invoicing, realization of export proceeds, documentation, licensing, and procedural compliance. Exporters are also…
Exporters and importers are extended a wide array of financial and logistical facilities by banks and other supporting institutions. These services are designed to facilitate smooth international trade operations, enhance liquidity, and promote competitiveness in the global market. Key facilities include export and import financing, letters of credit, guarantees, foreign currency accounts, and a variety…
Banks extend export credits to their customers in two stages viz. (i) pre-shipment stage and (ii) post-shipment stage. The first stage of the loan is the pre-shipment stage where the loan is released for procuring, Packing processing (where necessary), manufacturing, and finally for packing of goods. The loans and advances so provided by the banks,…
On July 2, 2024, the Reserve Bank of India (RBI) proposed a set of streamlined regulations governing the export and import of goods and services, with the objective of enhancing the ease of doing business—particularly for small exporters and importers—and enabling authorised banks to provide more efficient foreign exchange services. These proposals were introduced as…
