Finance ministry limits ECB inflows to $20mn

The finance ministry today released revised guidelines for external commercial borrowings (ECBs) limiting inflows from such borrowings into the country at $20 million, and for use only for foreign currency expenditure for permissible end-uses of ECB.

According to a release on the website of the finance minsitry, "borrowers raising ECBs more than $20 million shall park the proceeds overseas for use as foreign currency expenditure for permissible end-uses. The above modifications would be applicable to ECB exceeding $20 million per financial year both under the automatic route and under the approval route."

The release added that borrowers proposing to avail ECB up to $20 million for rupee expenditure for permissible end-uses would require prior approval of the Reserve Bank under the approval route. However, such funds shall be continued to be parked overseas until actual requirement in India.

"All other aspects of ECB policy such as $500 million limit per company per year under the automatic route, eligible borrower, recognised lender, average maturity period, all-in-cost ceiling, pre-payment, refinancing of existing ECB and reporting arrangements remain unchanged," the release added.

The release further said that the new conditions would not apply to borrowers who have already entered into loan agreements and obtained loan registration numbers from the Reserve Bank.