RBI Master Direction on External Commercial Borrowings dated 26 March 2019

All About Master Direction - External Commercial Borrowings  issued by RBI dated March 26, 2019 at one Place. 

                                 
                                                     Image Via : ipleaders

ECB Framework
Sr. No.	Parameters	Foreign currency (FCY)  Denominated ECB	INR Denominated ECB
1	Eligible Borrowers	All entities eligible to receive FDI. Further, the following entities are also eligible to raise ECB: 1. Port Trust; 2. Units in SEZ; 3. SIDBI; and 4. EXIM Bank of India.	1. All Entities eligible to raise FYC ECB; and 2. Registered entities engaged in micro-finance activities i.e Not for profit Companies, registered trust/societies/cooperatives and Non-Government Organisations.
2	Exchange rate	Exchange rate prevailing on the date of the agreement between the parties concerned or  rate, which is less than the rate prevailing on the date of agreement, if consented	For conversion to rupee, Rate prevalling on the date settlement
3	Recognised Lenders	1. Multilateral and Regional financial institutions where India is a member country will also be consider as recognised lenders; 2. Individuals, if they are foreign equity holders or for subscription to bond/debentures listed abroad; and 3. Subsidiaries of Indian banks/ Foreign branches are permitted only for FYB ECB (Except FCCBs and FCEBs), subject to applicable prudential norms, can participate as arrangers/underwriters/market-makers for RDB's issued overseas. However, underwriting by foreign branches/subsidiaries ofIndian banks for issuances by Indian banks willnot be allowed.
4	Minimum average maturity period (MAMP)	MAMP : 3 year However, for Manufacturing sector companies MAMP is 1 year for ECB upto USD 50 million or is equivalent per financial year. Further, if ECB raise from foreign equity holders and utilised for working capital purposes, general corporate purposes or repayment of rupee loans then MAMP is 5 years.
5	Cost Ceiling per annum	Benchmark rate + 450 bps Spread (4.5%)
6	Other cost	Reapyment charges/ Penal Interest for default or breach should not be more than 2%
7	End use	ECB Proceeds cannot be utilised for the following; 1. Real estate activities. 2. Investment in capital market. 3. Equity investment. 4. working capital purposes except from forign equity holder. 5. General corporate purposes except from foreign equity holder. 6. Repayment of Rupee loans except from foreign equity holder. 7. Lend to third party entities for the above activities.
8	Limit and leverage	All eligible borrowers can raise ECB up to USD 750 million or equivalent per financial year under auto route. Further, FCY denominated ECB raised from direct foreign equity holder, ECB liability-equity ratio for ECBs raised under the automatic route cannot exceed 7:1. However, this ratio will not be applicable if outstanding amount of all ECBs, including proposed one, is up to USD 5 million or equivalent. *Borrower entities must consider the guidelines issue for Debt-Equity ratio*
9	Issuance of Guarantee by Indian banks and financial institutions	Not Permitted
10	Parking of ECB	Abroad: (a) deposits or Certificate of Deposit with credit rating of atlease AA- by specified credit rating agency. (b) Treasury bills and other monetary instruments of one-year maturity (c) Deposit with overseas branch of Indian Bank Domestically: ECB proceeds meant for Rupee expenditure should be repatriated immediately for credit to their Rupee accounts with AD Category I banks in India. ECB borrowers are also allowed to park ECB proceeds in term deposits with AD Category I banks in India for a maximum period of 12 months cumulatively.
11	Procedure of raising ECB	Under Automatic Route: All ECBs can be raised, if they conform to the parameters prescribed under this framework and are examined by the AD Category I banks. Under Approval Route: The borrowers may approach the RBI with an application in prescribed format (Form ECB) for examination through their AD Category I bank.
12	Reporting under ECB	1. Obtain Loan Registeration Number  (LRN) for withdrawn in respect of ECB. 2. Borrower report actual ECB Transaction through FORM ECB 2 through AD Category I bank on monthly basis within 7 working days from the close of month. 3. Any changes in the ECB Should be reported to DSIM through revised Form ECB at the earliest but not later than 7 days from the change affected.
Late submission fee for delay in reporting
Sr. No.	Type of Return/Form	Period of delay	Applicable
1	Form ECB 2	Up to 30 calendar days from due date of submission	INR 5,000
2	Form ECB 2/Form ECB	Up to three years from due date of submission/date of drawdown	INR 50,000 per year
3	Form ECB 2/Form ECB	Beyond three years from due date of submission/date of drawdown	INR 100,000 per year

Click here & get Master direction : https://rbidocs.rbi.org.in/rdocs/notification/PDFs/5MD2603201979CA1390E9E546869B2A9A92614DEDBF.PDF

#Orporate