Reserve bank of India (RBI) issued Master circular no. RBI/2011-12/ 356, consolidates the existing instructions on the subject of "External Commercial Borrowings (ECB) and Trade Credits" at one place revised upto January 05, 2012.
Typically, ECB is one of the method allowed by RBI to access funds from abroad. ECB refer to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit, securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares) availed of from non-resident lenders with a minimum average maturity of 3 years.
RBI has allowed ECB under two routes, viz., (i) Automatic Route and (ii) Approval Route. Automatic Route allows Indian company to have external borrowing without any prior permission of RBI, however certain reporting obligations will always be on Indian borrower and RBI has categorized automatic route based on Industries and cap of external borrowing. Approval route is for more bigger and sensitive sectors in the light of economy sustainability, where borrower requires prior approval of RBI before initiating any ECB process.
In present Master circular, RBI has widely covered issues related to ECB and Trade credits and provided comprehensive document with inclusion of all circulars related to the subject issued by RBI.
No comments:
Post a Comment