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Presently, repayment of existing Rupee loans is not a permissible end-use for ECB.
This Circular permits, under the Approval Route, Indian companies in the infrastructure sector, to utilise 25% of the fresh ECB raised by them towards refinancing of the Rupee loan(s) availed by them from the domestic banking system, subject to the following conditions:
(i) At least 75% of the fresh ECB proposed to be raised must be utilised for capital expenditure towards a ‘new infrastructure’ project(s), where ‘infrastructure’ is as defined in terms of the extant guidelines on ECB.
(ii) In respect of remaining 25%, the refinance shall only be utilised for repayment of the Rupee loan availed of for ‘capital expenditure’ of earlier completed infrastructure project(s); and
(iii) The refinance shall be utilised only for the Rupee loans which are outstanding in the books of the financing bank concerned.
Companies desirous of availing such ECBs may submit their applications in Form ECB through their designated Authorised Dealer bank with the following documents:
(i) Details of the project(s) completed duly certified by the designated AD Category I bank;
(ii) Certificate from the Statutory Auditor as well as from the domestic lender bank(s) regarding the utilisation of Rupee term loans with respect to ‘capital expenditure’ for the completed infrastructure project(s);
(iii) Certificate from the designated Authorised Dealer bank mentioning the outstanding Rupee loans; and
(iv) Details of the proposed end-use of the new infrastructure project.
