An External Commercial Borrowing (ECB) is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (public sector undertakings) from official export credit agencies or multilateral financial Institutions with minimum average maturity of 3 years. ECBs cannot be used for investment in stock market or speculation in real estate.
External Commercial Borrowings include:
ECB can be accessed under two routes, viz.:-
Yes. Previously the permissible end-use of ECB for both the Routes were strictly controlled, until a recent notification by RBI stated that ECB can now be used under Approval route through their foreign equity holders for “General Corporate purposes” in addition to previously allowed investment financing purposes like purchase of capital assets.
A far reaching relaxation has been achieved for foreign invested Indian companies who earlier had only the alternative of increasing their share capital or availing expensive local INR loans for meeting their financing requirements.
ECBs for general corporate purposes are subject to the following regulations.