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October 2013

A. P. (DIR Series) Circular No. 31 dated 4th September, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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External Commercial Borrowings (ECB) from the foreign equity holder

Presently, ECB cannot be availed for general corporate purpose.

This circular permits eligible borrowers to avail ECB from their foreign equity holders for general corporate purposes under the Approval Route subject to the following conditions:

(a) Minimum paid-up equity of 25% must be held directly by the lender.
(b) Minimum average maturity of ECB must be 7 years.
(c) Such ECB cannot be used for any purpose not permitted under the extant ECB guidelines (including on-lending to their group companies/ step-down subsidiaries in India).
(d) Repayment of the principal can commence only after completion of minimum average maturity of 7 years. No prepayment will be allowed before maturity.

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