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January 2015

A. P. (DIR Series) Circular No. 39 dated 21st November, 2014

By Gaurang Gandhi Chartered Accountant
Reading Time 1 mins
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External Commercial Borrowings (ECB) Policy – Parking of ECB proceeds

Presently, persons who have availed ECB have to immediately bring into India, for credit to their Rupee accounts with banks in India, ECB proceeds meant for Rupee expenditure in India for permitted end uses.

This circular permits a person who has availed ECB to park ECB proceeds (both under the automatic and approval routes) in term deposits with a bank in India for a maximum period of six months, subject to the under mentioned terms and conditions, pending utilisation for permitted end uses.

i. The applicable guidelines with respect to eligible borrower, recognised lender, average maturity period, all-incost, permitted end uses, etc. have been complied with.
ii. No charge in any form can be created on such term deposits i.e. to say that the term deposits should be kept unencumbered during their currency.

iii. Such term deposits must be exclusively in the name of the borrower.

iv. Such term deposits must be available for liquidation as and when required.

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