Under the existing External Commercial Borrowing (ECB) policy, ECBs from direct Foreign Equity Holders are considered both under the automatic and the approval routes. ECBs from indirect equity holders and group companies and ECBs from direct Foreign Equity Holders for general corporate purpose are, however, considered under the approval route. Further, any request for change of the ECB lender in case of Foreign Equity Holders requires RBI's approval.

In order to simplify the existing procedure of ECB, RBI vide A.P. (DIR Series) Circular No.130 dated May 16, 2014 has decided to delegate powers to AD banks in order to approve the following cases under the automatic route:

i. Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies.

ii. Proposals for raising ECB for companies in miscellaneous services from direct / indirect equity holders and group companies.

Miscellaneous services mean companies engaged in training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector. Companies doing trading business, companies providing logistics services, financial services and consultancy services are, however, not covered under the facility.

iii. Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors for general corporate purpose.ECB for general corporate purpose (which includes working capital financing) is, however, permitted only from direct equity holder.

iv. Proposals involving change of lender when the ECB is from FEH – direct / indirect equity holders and group company.

However, the circular clarified that the other aspects of the ECB policy viz eligible borrower, recognised lender, permitted end-use, amount of ECB, etc. shall remain unchanged.

The changes will come into force with immediate effect.

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