The External Commercial Borrowings ("ECB") policy has from time to time been reviewed and modified by the Reserve Bank of India ("RBI") in light of changing economic trends and market conditions.
The RBI on 7th August 2007 further amended the ECB policy pursuant to which ECBs under the automatic and approval route in excess of USD 20 million per borrower per financial year would be allowed only for foreign currency expenditures in respect of permissible ECB end-uses. ECBs raised in excess of USD 20 million would be required to be parked overseas and the borrower would not be entitled to remit the funds to India.
The RBI further decided to permit borrowers to raise ECBs up to USD 20 million per borrower per financial year for foreign currency expenditures for permissible end uses under the automatic route, which would be parked overseas and not remitted to India. ECBs up to USD 20 million availed of by borrowers for rupee expenditure for permissible end uses would require prior RBI approval under the approval route. ECBs raised for Indian Rupee expenditure would be required to be parked overseas until actually required in India.
All other aspects of the ECB policy in relation to eligible borrower, borrowing limit under the automatic route, all-in-cost ceiling prepayment, would remain unaltered.
Such modifications to the ECB policy would not be applicable to eligible Indian borrowers who have already entered into loan agreements and obtained loan registration numbers from the RBI. However, those borrowers who have not taken verifiable and effective steps and obtained a loan registration number from RBI, may apply for the same with the RBI.
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