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Modifications Brought To ECB (External Commercial Borrowings) Policy
June 4, 2007, 12:13 pm
Filed under: FINANCE

The Government has brought out modifications in its policy on External Commercial Borrowing (ECB) with a view to modulating the capital inflows through this route.
The following are the modifications carried out in the policy:
(i) As per the extant ECB policy, utilisation of ECB proceeds for real-estate is not permitted. However, the term ‘real-estate’ excludes development of integrated townships. It has now been decided to withdraw the exemption accorded to the ‘development of integrated township’ as a permissible end-use of ECB.
(ii) In view of the upgradation of the country’s sovereign credit ratings existing all-in-cost ceilings are revised as follows: Average Maturity Period All-in-Cost ceilings over 6 Month LIBOR Existing New 3 years and up to 5 years 200 basis points p.a. 150 basis points p.a. and for More than 5 years 350 basis points p.a. 250 basis points p.a.

The changes will apply to ECBs both under the automatic route and the approval route.
These amendments in ECB policy will come into force on the date of Notification of Regulations and directions issued by the RBI in this regard under the Foreign Exchange Management Act, 1999 (FEMA).

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