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External Commercial Borrowing Compliance | ECB Compliance

External commercial borrowings are loans made to the Indian borrowers by non-resident lenders in convertible foreign exchange. It’s an instrument through which Indian borrowers avail loans from a foreign entity or from foreign sources.

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Introduction

External commercial borrowings are loans made to the Indian borrowers by non-resident lenders in convertible foreign exchange. It’s an instrument through which Indian borrowers avail loans from a foreign entity or from foreign sources.

It may be in form of commercial loans in the form of bank loans, seller loans, manufacturer loans, securitized securities (e.g. floating rate notes and fixed-rate bonds, non-convertible, partly convertible, or partially convertible preferred shares) from non-resident borrowers with a minimum average maturity of 3 years.

Indian companies are permitted to use the ECB either for fresh investment or to extend capacity. The generated funds can not be used for the following purpose:-

➲ Real estate investments

➲ Capital market investment.

➲ for Working capital uses, except for foreign equity holder

➲ or General corporate uses

➲ Loan repayment (of home country)

➲ Lending to other entity for the above activity


 ECB can be granted through :

➲ Automatic route

➲ Approval route

Reporting compliance for ECB borrower

Particulars

Form

Reported to

The Time duration of reporting

Under both route loan allotment number

Form 83(in duplicate certified by Secretary of the Company or Chartered Accountant) No need to submit a loan agreement

Designated authorized dealer bank

Within 7 days from the signing of the loan agreement

Monthly return

Form ECB2 (along with CA certificate) regarding use of ECB

Designated AD Bank to Division of Statistical Analysis and Computer Services (DESACS), Division of Balance of Payments Statistics, RBI.

Within 7 days from the end of each month

Under approval route

ECB application

Form ECB

Designated AD bank to the Chief Manager-in-Charge, Department of Foreign Exchange, RBI, Division of Central Office ECBs, Mumbai.

 

In case of the full conversion of ECB into equity

FC-GPR

RBI regional office

Within 7 days form the closer of the month for which it relates

In case of partial conversion of ECB

FC-GPR for converted portion and for remaining ECB-2

Department of Statistics and Information Management (DSIM), RBI

Within 7 days form the closer of the month for which it relates

Changes in

Repayment schedule

Currency of borrowing

AD bank

Change in name of the borrower company

Recognized lender

Cancellation of LRN

Change in end-use of ECB

Reduction in the amount of ECB

Reduction in all cost of ECB

 

Form 83

To DSIM, RBI through AD bank

Prior approval of AD bank is necessary

Within 7 days from the date of change effect

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