{"id":2255,"date":"2022-02-25T05:38:21","date_gmt":"2022-02-25T05:38:21","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=2255"},"modified":"2022-02-26T07:24:28","modified_gmt":"2022-02-26T07:24:28","slug":"external-commercial-borrowing-ecb","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/external-commercial-borrowing-ecb\/","title":{"rendered":"External Commercial Borrowing (ECB)"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-2265\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/External-Commercial-Borrowing-ECB-1.jpeg\" alt=\"External Commercial Borrowing (ECB)\" width=\"1000\" height=\"1000\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/External-Commercial-Borrowing-ECB-1.jpeg 1000w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/External-Commercial-Borrowing-ECB-1-300x300.jpeg 300w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/External-Commercial-Borrowing-ECB-1-150x150.jpeg 150w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/External-Commercial-Borrowing-ECB-1-768x768.jpeg 768w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/External-Commercial-Borrowing-ECB-1-230x230.jpeg 230w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<p>ECBs are commercial loans\/borrowing raised by eligible resident entities\/companies from recognized Non-resident entities\/companies and should equal to parameters such as: &#8211;<\/p>\n<ul>\n<li>minimum maturity,<\/li>\n<li>permitted and non-permitted end-uses,<\/li>\n<li>maximum all-in-cost ceiling, etc.<\/li>\n<\/ul>\n<p>The parameters apply in totality and not on a standalone basis.<\/p>\n<p><strong>ECB comprises the following three tracks for raising loans: &#8211;<\/strong><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-2256\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/Capture-2.png\" alt=\"\" width=\"915\" height=\"366\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/Capture-2.png 915w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/Capture-2-300x120.png 300w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/02\/Capture-2-768x307.png 768w\" sizes=\"auto, (max-width: 915px) 100vw, 915px\" \/><\/p>\n<p><strong>Form of ECBs: &#8211;<\/strong><\/p>\n<ol>\n<li>Loans including bank loans<\/li>\n<li>Securitised instruments (floating rate notes and fixed-rate bonds, non-convertible optionally convertible preference shares\/debentures)<\/li>\n<li>Buyers&#8217; credit<\/li>\n<li>Suppliers&#8217; credit<\/li>\n<li>Foreign Currency Convertible Bonds (FCCBS)<\/li>\n<li>Financial Lease and<\/li>\n<li>Foreign Currency Exchangeable Bonds (FCEBs)<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><strong>NOTE: &#8211; <\/strong>Foreign currency exchangeable bonds (FCEBs) can be issued only under the approval route. While others mentioned above can be raised both under the automatic and approval routes.<\/p>\n<p>8. masala bonds<\/p>\n<p>However, the external commercial borrowing (ECB) framework does not apply regarding investment in Non-convertible Debentures (NCDs) in India made by Registered Foreign Portfolio Investors (RFPIs).<\/p>\n<p><strong>The ECB\u2019s are classified under 3 \u2018Tracks\u2019 under the new framework:<\/strong><\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"260\"><strong>Track I<\/strong><\/p>\n<p><strong>(ECB over 3\/5average maturity)<\/strong><\/td>\n<td width=\"260\"><strong>Track II<\/strong><\/p>\n<p><strong>(ECB over 10 years average maturity)<\/strong><\/td>\n<td width=\"260\"><strong>Track III<\/strong><\/p>\n<p><strong>(ECB over3\/5average maturity)<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"260\">Minimum Average Maturity<\/td>\n<td width=\"260\"><\/td>\n<td width=\"260\"><\/td>\n<\/tr>\n<tr>\n<td width=\"260\">\u2022 Up to USD 50: 3 years.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Beyond USD 50: <strong><em>5 years<\/em><\/strong>.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 <strong><em>5 years<\/em><\/strong> for eligible borrowers irrespective of the amount of borrowing.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 <strong><em>5 years<\/em><\/strong> for FCCB\/FCEBs<\/p>\n<p>irrespective of the amount of borrowing. The call and put option, if any, for FCCBs shall not be<\/p>\n<p>exercisable prior to <strong><em>5 years.<\/em><\/strong><\/td>\n<td width=\"260\"><strong><em>10 years,<\/em><\/strong> irrespective of the amount<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/td>\n<td width=\"260\">\u2022 Up to USD 50: <strong><em>3 years.<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Beyond USD 50: <strong><em>5 years<\/em><\/strong>.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 <strong><em>5 years<\/em><\/strong> for eligible borrowers irrespective of the amount of borrowing.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 <strong><em>5 years<\/em><\/strong> for FCCB\/FCEBs<\/p>\n<p>irrespective of the amount of borrowing. The call and put option, if any, for Foreign currency convertible bonds (FCCBs) shall not be<\/p>\n<p>exercisable prior to <strong><em>5 years.<\/em><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>Eligible Borrowers<\/strong><\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"260\"><strong>Track I<\/strong><\/p>\n<p>&nbsp;<\/td>\n<td width=\"260\"><strong>Track II<\/strong><\/p>\n<p>&nbsp;<\/td>\n<td width=\"260\"><strong>Track III<\/strong><\/p>\n<p>&nbsp;<\/td>\n<\/tr>\n<tr>\n<td width=\"260\">\u2022 Companies in the following sectors:<\/p>\n<p>\u00b7 Manufacturing sector<\/p>\n<p>\u00b7 Software development<\/p>\n<p>\u00b7 Shipping and airlines companies<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Units in SEZs<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Small Industries and DevelopmentBank of India<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Holding companies\u2019<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Exim Bank (approval route)<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Companies in infrastructure sectorNBFCs\u2013IFCs, NBFCs \u2013 AssetsFinancecompanies, Holdingcompanies and core InvestmentCompanies (CICs).<\/td>\n<td width=\"260\">\u2022 All entities under Track I.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Companies in the infrastructure sector (definition aligned with Harmonized Master List of Government of India).<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Holding companies<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Core investment companies.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 REITs and INVTTs registered with SEBI.<\/td>\n<td width=\"260\">\u2022All entities listed under Track II.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 All NBFCs coming under the regulatory purview of the RBI.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Entities engaged in micro<\/p>\n<p>finance activities, subject to conditions.<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 Companies in Miscellaneous Services, viz.<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 R&amp;D<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Training (excluding educational institutes)<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Companies supporting infrastructure<\/p>\n<p>\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Logistic services<\/p>\n<p>&nbsp;<\/p>\n<p>\u2022 SEZs\/NMIZs Developers<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. <a href=\"https:\/\/www.akgvg.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>AKGVG &amp; Associates<\/strong><\/a> does not intend to advertise its services through this.<\/p>\n<p>Posted by:<\/p>\n<p>CS Neetu Saini<\/p>\n<p>AKGVG &amp; Associates<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; ECBs are commercial loans\/borrowing raised by eligible resident entities\/companies from recognized Non-resident entities\/companies and should equal to parameters such as: &#8211; minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The parameters apply in totality and not on a standalone basis. ECB comprises the following three tracks for raising loans: &#8211; Form of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":2265,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120],"tags":[479],"class_list":["post-2255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-secretarial-services","tag-secretarial"],"_links":{"self":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/2255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/comments?post=2255"}],"version-history":[{"count":4,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/2255\/revisions"}],"predecessor-version":[{"id":2266,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/2255\/revisions\/2266"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media\/2265"}],"wp:attachment":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media?parent=2255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/categories?post=2255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/tags?post=2255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}