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June 2014

A. P. (DIR Series) Circular No. 130 dated 16th May, 2014

By Gaurang Gandhi Chartered Accountant
Reading Time 1 mins
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External Commercial Borrowings (ECB) from Foreign Equity Holder – Simplification of Procedure

This circular provides that, with immediate effect, approval under the Automatic Route will now be granted by the Bank of the borrower and not by RBI in the following cases where ECB has been availed of from FEH (direct holder as well as indirect holders) and group companies of FEH: –

1. ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies.

2. ECB by companies in miscellaneous services from direct/indirect equity holders and group companies. Miscellaneous services mean companies engaged in training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector. Companies doing trading business, companies providing logistics services, financial services and consultancy services are, however, not covered under the facility.

3. ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors for general corporate purpose (which includes working capital financing) from direct equity holder.

4. Change of lender when the ECB is from FEH – direct/ indirect equity holder(s) and group companies.

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