Rationalized External Commercial Borrowings framework to flourish Ease of Doing Business in India

Mumbai, January 18: With the view to improve the ease of doing business, the RBI in consultation with the government has decided to rationalise the existing framework for External Commercial Borrowings (ECB) and Rupee Dominated bonds. The new policy aligned has been implemented as a part of efforts underway at developing the regulations framed under Foreign Exchange Management Act, 1999.

 

 

The said rationalising constitutes replacing the current four-tiered structure with an instrument and neutral framework. It is under the novel policy that the list of eligible borrowers, resident or non-resident, has been expanded. Also all the entities eligible to receive foreign direct investment can borrow under the ECB framework.

 

“Any entity who is a resident of a country which is Financial Action Task Force compliant will be treated as a recognised lender. This change increases the lending options and allows various new lenders in ECB space while strengthening the Anti-Money Laundering and Countering Financing of Terrorism framework.”, reported the statement.

 

“The minimum average maturity period has been kept at 3 years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of maturity period as at present, except the borrowers specifically permitted in the circular to borrow for a shorter period. All eligible borrowers can now raise ECBs up to USD 750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits”, it informed further.