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March 2010

A. P. (DIR Series) Circular No. 28, dated January 25, 2010

By Pinky Shah
Sonalee Godbole
Tarun Ghia
Brijesh Cholera
Pratik Mehta
Gaurang Gandhi
Chartered Accountants
Reading Time 1 mins
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52 A. P. (DIR Series) Circular No. 28, dated
January 25, 2010

External Commercial Borrowings (ECB) Policy

Presently, eligible borrowers in the
telecommunications sector can avail of ECB for the purpose of payment for
spectrum allocation, under the automatic route.

This circular has made a one-time relaxation in the
end-use conditions of the ECB policy. As a result, successful bidders can
initially pay for spectrum allocation out of Rupee funds and can subsequently
avail ECB under the approval route to refinance the Rupee payments. This is
subject to the following conditions:

1. The ECB should be raised within 12 months from
the date of payment of the final instalment to the government.

2. The designated AD – Category I bank must
monitor the end-use of funds.

3. Banks in India cannot provide any form of
guarantees.

4. All other conditions of ECB, such as eligible
borrower, recognized lender, all-in-cost, average maturity, etc., will have to
be complied with.


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