- The Reserve Bank of India has rationalisation in the New External Commercial Borrowings (ECB) Framework and Rupee denominated bonds to further improve the ease of doing business. Some major changes are:
- 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.
- Minimum Average Maturity Period (MAMP): MAMP will be 3 years for all ECBs.
- However, for ECB raised from foreign equity holder and utilised for specific purposes, the MAMP would be 5 years.
- Similarly, for ECB up to USD 50 million per financial year raised by manufacturing sector, which has been given a special dispensation, the MAMP would be 1 year.
- Eligible borrowers: This has been expanded to include all entities eligible to receive FDI. Further, the following entities are also eligible to raise ECB:
a) Port Trusts;
b) Units in SEZ;
c) SIDBI;
d) EXIM Bank; and
e) Registered entities engaged in micro-finance activities, viz., registered Not for Profit companies, registered societies/trusts/cooperatives and Non-Government Organisations (permitted only to raise INR ECB).
Points to remember:
- All eligible borrowers can now raise what amount of ECB per financial year?
- Full form of MAMP?
- MAMP limit(years)?
- Eligible borrowers in ECB?- All those who are eligible to receive FDI.