External Commercial Borrowings

Automatic route:

·         ECB can be given by only recognized lenders and can be availed by eligible buyers only.

·         The proposed ECB must satisfy the general conditions (such as the end use restrictions, average maturity and all in cost ceilings etc) prescribed under the ECB guidelines for qualifying under the Automatic Route.

·         Software companies can avail ECB for the purpose of import of capital goods.  The borrower can draw-down the loan only after obtaining the loan registration number (‗LRN‘) from Department of Statistical and Information Systems (DSIM), Reserve Bank of India  

·         Form 83 (in duplicate), duly certified by the Company Secretary or Chartered Accountant is required to be filed with Authorised dealer. One copy is to be forwarded by the designated AD bank to the Director, Balance of Payments Statistics Division, DSIM, Mumbai. Submission of copy of loan agreement is not required.

·         The amount that can be availed under automatic route under ECB is USD 500 Million one financial year. The maturity of ECB in case the amount upto USD 20 million cannot be less than three years and in case of ECB above USD 20 million or equivalent and up to USD 500 million or its equivalent with a minimum average maturity of five years.

·         There is also ceiling on the all in cost that can be incurred by the borrower towards the cost like rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees payable in Indian Rupees etc. The cost is specified to be LIBOR for the respective currency of borrowing of 6 months + 300 basis points in case the period of maturity is 3 years and upto 5 years and it can be LIBOR of 6 months + 500 basis points in case period of maturity is 5 years or more.

Prepayment of ECB

USD 500 million would be allowed by the AD bank without prior approval of RBI subject to compliance with the stipulated minimum average maturity period as applicable to the loan, while pre-payment of ECB for amounts exceeding USD 500 million would be considered by the RBI under the Approval Route.

Monthly return

Borrowers are required to submit ECB-2 Return certified by the designated AD on monthly basis so as to reach DSIM, RBI within seven working days from the close of month to which it relates.

Thanks & Regards 

Vinayak Gaonkar

9869621072/9869273067