April 2010
A.P. (DIR Series) Circular No. 39, dated 2-3-2010 — External Commercial Borrowings (ECB) Policy.
By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Tarun Ghia, Brijesh Cholera, Pratik Mehta | Chartered Accountants
Sejal Vasa | Company Secretary
Reading Time 1 mins
fiogf49gjkf0d
New Page 1
Part C : RBI / FEMA
Given below are the
highlights of certain RBI Circulars.
13 A.P.
(DIR Series) Circular No. 39, dated 2-3-2010 — External Commercial Borrowings (ECB)
Policy.
Presently, Non-Banking
Finance Companies (NBFC) which are exclusively engaged in financing of
infrastructure sector are permitted to avail of ECB from recognised lenders,
including international banks, under the approval route, for on-lending to the
infrastructure sector.
This Circular states that
with the coming into existence of separate category of NBFC viz. Infrastructure
Finance Companies (IFC) vide guidelines contained in Circular DNBS.PD.CC No.
168/03.02.089/2009-10, dated February 12, 2010, NBFC are no longer permitted to
avail ECB for on-lending to the infrastructure sector.
IFC can avail of ECB for
on-lending to the infrastructure sector after obtaining RBI permission under the
‘approval route’, subject to the following conditions :
(i) Compliance with the
norms prescribed in the aforesaid DNBS Circular, dated February 12, 2010;
(ii) Hedging of the
currency risk in full; and
(iii) The total
outstanding ECBs including the proposed ECB not exceeding 50% of the Owned
Funds.
