External Commercial Borrowings (ECB) Policy amendment
As per the existing policy on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency, ECB can be raised under tracks I and III for working capital purposes. As per extant regulations ECB can be raised from direct and indirect equity holders or from a group company for working capital purpose. The above…
Read article External Commercial Borrowings (ECB) Policy – Revision
In consultation with Government of India, the Reserve Bank of India liberaised some aspects of ECB policy including policy on Rupee Denominated Bonds (RDB). According to review of the policy, the eligible borrower companies in manufacturing sector can raise Extranal Commercial Borrowings up to USD 50 million or its equivalent with minimum average maturity period…
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Voluntary Pledge of Gold and Silver for Collateral-Free Agriculture and MSME Loans: RBI Clarification
The Reserve Bank of India (RBI) has issued a clarification regarding the treatment of loans extended to borrowers in the Agriculture and Micro, Small, and Medium Enterprises (MSME) sectors, where gold or silver is voluntarily pledged as collateral. Background As per existing norms, banks are required to provide collateral-free loans up to a prescribed limit…
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External Commercial Borrowings (ECB) – Clarifications on hedging
Further to its earlier circulars, Reserve Bank of India has clarified on the provisions of hedging in the ECB framework vide its circular (A.P. (DIR Series) Circular No. 15) dated 07.11.2016. The circular provides clarity on hedging ‘External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency to bring uniformity in hedging practice in…
Read article External Commercial Borrowings (ECB) in Indian Rupees
The recognized overseas ECB lenders who are able to mobilise Indian Rupees may extend Rupee denominated loans to Indian companies. The lenders may enter into back-to-back swap transaction with AD-Category-1 banks to facilitate Rupee denominated lending. The recognized non-resident lender (financier from abroad) approaches his overseas bank with a request for a swap rate for…
Understanding meaning of External Commercial Borrowing (ECB)
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 borrowings under ECB take place in two channels namely automatic route and approved routes. Eligible borrowers like Corporate Importers,…
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