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January 2012

A.P. (DIR Series) Circular No. 52, dated 23-11-2011 — External Commercial Borrowings (ECB) Policy — Parking of ECB proceeds.

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Presently, borrowers are permitted to either keep ECB proceeds abroad or remit these funds to India, pending utilisation for permissible end-uses.

This Circular states that henceforth all proceeds of ECB raised abroad and meant for Rupee expenditure in India should be brought back immediately by the borrowers for credit to their Rupee accounts with banks in India. These Rupee funds cannot be used for investment in capital markets, real estate or for inter-corporate lending. Only ECB proceeds meant for foreign currency expenditure can be retained abroad pending utilisation.

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