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August 2013

A. P. (DIR Series) Circular No. 120 dated June 26, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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External Commercial Borrowings (ECB) Policy – Structured Obligations

Presently, credit enhancement can be provided by multilateral/regional financial institutions, Government owned development financial institutions, direct/indirect foreign equity holder(s), under the automatic route, for domestic debt raised through issue of capital market instruments, such as, Rupee denominated bonds and debentures, by Indian companies engaged exclusively in the development of infrastructure and by Infrastructure Finance Companies (IFC).

This circular states that credit enhancement can be also be provided by eligible non-resident entities to the domestic debt raised through issue of INR bonds /debentures by all borrowers eligible to raise ECB under the automatic route, subject to the following: –

1. The minimum average maturity of the underlying debt instruments must be three years.

2. Prepayment and call / put options will not be permissible for these capital market instruments with an average maturity period of up to 3 years.

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A. P. (DIR Series) Circular No. 119 dated June 26, 2013

A. P. (DIR Series) Circular No. 121 dated June 26, 2013