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September 2012

A. P. (DIR Series) Circular No. 134 dated 25th June, 2012

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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External Commercial Borrowings (ECB) – Repayment of Rupee loans.

This circular permits Indian companies in the manufacturing and infrastructure sector who have consistent foreign exchange earnings during the last three years to avail, under Approval Route, ECB for repayment of Rupee loan(s) availed of from the domestic banking system and/or for fresh Rupee capital expenditure, provided the companies are not in the default list/caution list of the Reserve Bank of India.

The overall ceiling for such ECB will be US $ 10 (ten) billion and the maximum permissible ECB that can be availed of by an individual company, based on its foreign exchange earnings and its ability to service, is limited to 50% of the average annual export earnings realized during the past three financial years. Draw down of the entire facility must be undertaken within a month after taking the Loan Registration Number (LRN) from RBI.

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