Repayment of Rupee loans and/or fresh Rupee capital expenditure by Availing External Commercial Borrowings (ECB)

External Commercial Borrowings (ECB) Policy – Repayment of Rupee loans and/or fresh Rupee capital expenditure – USD 10 billion scheme

 

 

Earlier under A.P. (DIR Series) Circular No. 134 dated June 25, 2012, RBI

 allowed  Indian companies to avail of ECBs for repayment of Rupee loan(s) availed of from the domestic banking system and / or for fresh Rupee capital expenditure, under the approval route, subject to them satisfying the following conditions:-

1. Only companies in the manufacturing and infrastructure sector will be eligible to avail of such ECBs;
2. Such companies shall be a consistent foreign exchange earner during the past three financial years;
3. Such companies are not in the default list/caution list of the Reserve Bank of India; and
4. Such ECBs shall only be utilized for repayment of the Rupee loan(s) availed of for 'capital expenditure' incurred earlier and are still outstanding in the books of the domestic banking system and / or for fresh Rupee capital expenditure

Cap on ECB that can be availed of by an individual company under the scheme is limited to 50 per cent of the average annual export earnings realised during the past three financial years.

3. On a review, it has been decided:

(a) to enhance the maximum permissible limit of ECB that can be availed of to 75 per cent of the average foreign exchange earnings realized during the immediate past three financial years or 50 per cent of the highest foreign exchange earnings realized in any of the immediate past three financial years, whichever is higher;

(b) in case of Special Purpose Vehicles (SPVs), which have completed at least one year of existence from the date of incorporation and do not have sufficient track record/past performance for three financial years, the maximum permissible ECB that can be availed of will be limited to 50 per cent of the annual export earnings realized during the past financial year; and

(c) The maximum ECB that can be availed by an individual company or group, as a whole, under this scheme will be restricted to USD 3 billion.

Ref- RBI circular -RBI/2012-13/200-A.P. (DIR Series) Circular No. 26
dated September 11, 201