The Reserve Bank of India (RBI) has wide press release dated 30. 07. 2019 revised the framework for External Commercial Borrowings
In the earlier framework as covered in the Master Direction – External Commercial Borrowings, Trade Credit, and Structured Obligations (Master Directions), ECB proceeds could not be utilized for working capital purposes, general corporate purposes and repayment of Rupee loans except when the ECB was availed from foreign equity holder for a minimum average maturity period (MAMP) of 5 years.
Further lending out of ECB proceeds for real estate activities, investment in the capital market, Equity investment, working capital purposes, general corporate purposes, repayment of rupee loans was also prohibited. These restrictions were made under the end-uses (Negative list) of the Master Direction.
The said relaxations by RBI reflect as under:
|ECBs Availed from||ECBs Availed from||By||Permitted End-uses||MAMP|
|Erstwhile Provision||Foreign Equity Holder||Eligible Borrower|
|Amended Provision||Recognised Lenders*||Eligible Borrower||10 Years|
|Recognised Lenders*||NBFC’s|| On-lending for:||10 Years|
|Recognised Lenders*||Eligible Borrowers including|
|Eligible Borrowers including NBFC’s|
|Recognised Lenders*||Eligible Borrowers including NBFC’s||10 Years|