Capital Account Convertability
What is ECBCB? Source of funds for corporates from abroad with advantage of lower rates of interest prevailing in the international financial markets longer maturity period for financing expansion of existing capacity as well as for fresh investment Defined as to include commercial loans [in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments (e.g. floating rate notes and fixed rate bonds, CP)] availed from non-resident lenders with minimum average maturity of 3 years.
Source of Law
The set of rules that governs foreign investment in form of borrowings is called
ECB Regulations by MOF Section 6(3)(d) of the Foreign Exchange Management Act, 1999 read with the
Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000 which is also known as Notification No. FEMA 3 /
2000-RB dated 3rd May 2000. Consolidated RBI Master Circular No. /07 /2008-09 on “External Commercial
Borrowings and Trade Credits” dated 1st July 2008 having sunset clause of one year .This circular will stand withdrawn on July 1, 2009 and will be replaced by an updated Master Circular.
Modes of raising ECB * Foreign currency loan raised by residents from recognised lenders The ambit of ECB is wide. It recognizes simple form of credit as suppliers’ credit as well as sophisticated financial products as securitisation instruments. Basically ECB suggests any kind of funding other than Equity (considered foreign direct investment) be it Bonds, Credit notes, Asset Backed Securities, Mortgage
Backed Securities or anything of that nature, satisfying the norms of the ECB regulations. Commercial Bank Loans : in the form of term loans from banks outside India Buyer's Credit Supplier's Credit Securitised instruments such as Floating Rate Notes (FRNs), Fixed Rate Bonds
(FRBs), Syndicated Loans etc. Syndicated Loan, CP Credit from official export credit agencies Commercial borrowings from the private
Source of Law
The set of rules that governs foreign investment in form of borrowings is called
ECB Regulations by MOF Section 6(3)(d) of the Foreign Exchange Management Act, 1999 read with the
Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000 which is also known as Notification No. FEMA 3 /
2000-RB dated 3rd May 2000. Consolidated RBI Master Circular No. /07 /2008-09 on “External Commercial
Borrowings and Trade Credits” dated 1st July 2008 having sunset clause of one year .This circular will stand withdrawn on July 1, 2009 and will be replaced by an updated Master Circular.
Modes of raising ECB * Foreign currency loan raised by residents from recognised lenders The ambit of ECB is wide. It recognizes simple form of credit as suppliers’ credit as well as sophisticated financial products as securitisation instruments. Basically ECB suggests any kind of funding other than Equity (considered foreign direct investment) be it Bonds, Credit notes, Asset Backed Securities, Mortgage
Backed Securities or anything of that nature, satisfying the norms of the ECB regulations. Commercial Bank Loans : in the form of term loans from banks outside India Buyer's Credit Supplier's Credit Securitised instruments such as Floating Rate Notes (FRNs), Fixed Rate Bonds
(FRBs), Syndicated Loans etc. Syndicated Loan, CP Credit from official export credit agencies Commercial borrowings from the private