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August 2013

A. P. (DIR Series) Circular No. 6 dated July 8, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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External Commercial Borrowings (ECB) Policy – Non-Banking Finance Company – Asset Finance Companies (NBFC – AFCs)

This circular permits NBFC – AFC to avail ECB (including outstanding ECB) up to 75% of their owned funds, subject to a maximum of $ 200 million or its equivalent per financial year under the Automatic Route to finance the import of infrastructure equipment for leasing to infrastructure projects. ECB in excess of the above limit can be availed of under the Approval Route. The minimum average maturity period of the ECB must be five years. Where ECB is availed of in the form of Foreign Currency Bonds from international capital markets, than such ECB must be raised only from those international capital markets that are subject to regulations prescribed by regulator in the host country which is a member of the Financial Action Task Force (FATF) and is compliant with FATF guidelines. Foreign currency risk in respect of ECB will have to be hedged in full.

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