Foreign Investments: Meaning of FDI, FPI and FII explained
An investment made in India by foreign entities, non-resident Indians, and persons of Indian origin in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities, etc., is known as foreign investment in India. Based on the type of foreign Investments, they are classified as below. Foreign Direct Investment (FDI) Foreign Portfolio Investment…
Read article
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…
Read article
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…
Read article
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…
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…
Read article