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November 2011

A.P. (DIR Series) Circular No. 28, dated 26-9-2011 — External Commercial Borrowings (ECB) Policy — Structured obligations for infrastructure sector.

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Presently, credit enhancement can be provided, under the Approval Route, by multilateral/regional financial institutions and Government-owned development financial institutions for domestic debt raised through issue of capital market instruments, such as debentures and bonds, by Indian companies engaged exclusively in the development of infrastructure and by the Infrastructure Finance Companies (IFC).

This Circular permits direct foreign equity holder(s) holding a minimum of 25%t of the paid-up capital and indirect foreign equity holder, holding at least 51% of the paid-up capital, to provide credit enhancement to Indian companies engaged exclusively in the development of infrastructure and to IFC. As a result, credit enhancement by all eligible non-resident entities will henceforth be permitted under the automatic route and no prior approval will be required from RBI.

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