RBI announces the New External Commercial Borrowings (ECB) Framework

List of eligible borrowers expanded, all entities eligible to receive FDI can borrow under the ECB framework

The Reserve Bank of India (RBI) in consultation with the Government of India, has issued new External Commercial Borrowings (ECB) Framework to rationalise the extant framework for ECB and Rupee denominated bonds to further improve the ease of doing business.

Major liberalisation/rationalisation in the new framework are as under:

* Tracks I and II under the existing framework are merged as Foreign Currency denominated ECB and Track III and Rupee Denominated Bonds framework are combined as Rupee Denominated ECB to replace the current four-tiered structure. The framework is instrument-neutral.

* The list of eligible borrowers has been expanded. All entities eligible to receive foreign direct investment can borrow under the ECB framework.

* Any entity who is a resident of a country which is FATF or IOSCO 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 AML/CFT framework.

* The minimum average maturity period (MAMP) has been kept at 3 years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs 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 US$ 750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits.

* Introduction of late submission fee for delay in prescribed reporting under the ECB framework to obviate the need for compounding these contraventions.

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