RBI announces the New External Commercial Borrowings (ECB) Framework as a part of the on-going efforts at rationalising multiple regulations framed under FEMA 1999.
The new framework is instrument neutral and would further strengthen the AML/CFT framework. The major liberalisation / rationalisation in the new framework includes Tracks I and II under the existing framework are merged as “Foreign Currency denominated ECB” and Track III and Rupee Denominated Bonds framework are combined as “Rupee Denominated ECB” to replace the current four-tiered structure. The list of eligible borrowers has been expanded. All entities eligible to receive foreign direct investment can borrow under the ECB framework. The minimum average maturity period (MAMP) has been kept at 3 years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs as at present, except the borrowers specifically permitted in the circular to borrow for a shorter period. All eligible borrowers can now raise ECBs up to USD 750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits. Introduction of late submission fee for delay in prescribed reporting under the ECB framework to obviate the need for compounding these contraventions.
The new framework is instrument neutral and would further strengthen the AML/CFT framework. The major liberalisation / rationalisation in the new framework includes Tracks I and II under the existing framework are merged as “Foreign Currency denominated ECB” and Track III and Rupee Denominated Bonds framework are combined as “Rupee Denominated ECB” to replace the current four-tiered structure. The list of eligible borrowers has been expanded. All entities eligible to receive foreign direct investment can borrow under the ECB framework. The minimum average maturity period (MAMP) has been kept at 3 years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs as at present, except the borrowers specifically permitted in the circular to borrow for a shorter period. All eligible borrowers can now raise ECBs up to USD 750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits. Introduction of late submission fee for delay in prescribed reporting under the ECB framework to obviate the need for compounding these contraventions.
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