ECB

External Commercial Borrowings (ECB)

• ECBs are commercial loans raised by eligible resident entities from recognized non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The parameters apply in totality and not on a standalone basis. The framework for raising loans through ECB comprises the following 3 tracks:

  Track I: Medium term foreign currency denominated ECB with minimum average maturity of 3/5 years.

  Track II: Long term foreign currency denominated ECB with minimum average maturity of 10 years.

  Track III: Indian Rupee (INR) denominated ECB with minimum average maturity of 3/5 years.

  ECB can be raised under 2 routes:

  1. Automatic Route
  2. Approval Route

  Automatic Route

  • Cases under automatic route are examined by the AD Category-I banks.
  • LRN is obtained by filing Form 83.
  • Borrowers eligible above shall have a board approved risk management policyand shall keep their ECB exposure hedged 100 per cent at all times.
  • The entities raising ECB under the provisions of tracks I and II are required to follow the guidelines forhedging issued, if any, by the concerned sectoral or prudential regulator in respect of foreign currency exposure.
  • AD Category-I banks may permit creation of securityfor raising ECBs subject to fulfillment of certain conditions.
  • Issue of corporate or personal guarantee.
  • The borrowing entities will be governed by the guidelines on debt equity ratioissued, if any, by the sectoral or prudential regulator concerned.
  • Conversionof ECB into equity.
  • Permitted changes in ECB parametersshould be reported to the DSIM (Department of Statistics and Information Management) through revised Form 83 at the earliest, in any case not later than 7 days from the changes effected.
  • Filing of ECB- 2on monthly basis.
  • In case of all applications where the borrowing entity has indicated about the pending investigations / adjudications / appeals, the AD Cat I Banks / Reserve Bank while approving the proposal shall intimate the agencies concerned by endorsing a copy of the approval letter.

   

  Approval Route

  • File application in Form ECB to RBI through AD Category-I bank.
  • Such cases shall be considered keeping in view the overall guidelines, macroeconomic situation and merits of the specific proposals.
  • AD Category-I banks may permit creation of securityfor raising ECBs subject to fulfillment of certain conditions.
  • Issue of corporate or personal guarantee.
  • The borrowing entities will be governed by the guidelines on debt equity ratioissued, if any, by the sectoral or prudential regulator concerned.
  • Conversionof ECB into equity.
  • Permitted changes in ECB parametersshould be reported to the DSIM (Department of Statistics and Information Management) through revised Form 83 at the earliest, in any case not later than 7 days from the changes effected.
  • Filing of ECB- 2on monthly basis.
  • In case of all applications where the borrowing entity has indicated about the pending investigations / adjudications / appeals, the AD Cat I Banks / Reserve Bank while approving the proposal shall intimate the agencies concerned by endorsing a copy of the approval letter.

   

  Brief on our Services.

  RM Shah & Co is having more than 12 years of experience in handling projects related to clearances required for a foreign business desirous of investing and doing business in India. Our services include: –

  • Obtaining LRN for raising ECB.
  • Filing of application in Form ECB for obtaining RBI approval.
  • Providing risk management policy.
  • Guidance on hedging ECB exposure.
  • Compliances for creation of security or issue of guarantee for securing ECB.
  • Guidance on maintaining debt-equity ratio as per the sector specific guidelines.
  • Conversion of ECB into equity.
  • Compliances for changing ECB parameters.
  • Liaison with different regulatory authorities, departments and ministries, RBI and AD Category-I Banks.
  • Apprising the clientele on complete details of current regulatory practices applicable to particular business.
  • Assisting the clientele in preparing all the associated documents.
  • Application for all legal clearances, licenses and approvals.

   

  Terms of Services

  • Cases can be discussed via phone, Skype or email.
  • Post discussion of the case, fee for the project will be quoted.
  • Please note that business operating in different sectors need to comply sector specific guidelines issued for hedging by the concerned sectoral or prudential regulator in respect of foreign currency exposure and debt-equity ratio along with the general compliances of corporate laws of the country.
  • Upon agreed terms and conditions, the project will be handled by our team having specialized knowledge of the approval process.
  • A brief on regulatory compliances, approvals required, requirement of documents from your side and timelines involved for each stage will be provided by our specialized team.
  • For raising ECB, you require a robust system to comply with the laws of the land. Alternatively, you can also subscribe to our ‘Annual Compliance and Maintenance of Statutory Records’ services, fees of which will be provided upon request.

   

  To discuss your case, please visit our Contact Us page.