Firms can use ECB for general corporate purposes: RBI
5 Sep 2013 11:02 PM GMT
In order to encourage capital flows, the RBI on Wednesday eased the external commercial borrowing (ECB) norms by allowing companies to use funds raised from foreign partners for general corporate purposes.
‘On a review, it has been decided to permit eligible borrowers to avail of ECB under the approval route from their foreign equity holder company with minimum average maturity of 7 years for general corporate purposes,’ said the Reserve Bank in clarifications on its August 14 Overseas Direct Investment (ODI) guidelines.
Till now borrowings in the form of ECB were not permitted to be utilised for general corporate purpose.However, the RBI has put certain conditions for availing the benefits of relaxed norms.
‘Minimum paid-up equity of 25 per cent should be held directly by the lender (overseas partner),’ the RBI said.
‘On a review, it has been decided to permit eligible borrowers to avail of ECB under the approval route from their foreign equity holder company with minimum average maturity of 7 years for general corporate purposes,’ said the Reserve Bank in clarifications on its August 14 Overseas Direct Investment (ODI) guidelines.
Till now borrowings in the form of ECB were not permitted to be utilised for general corporate purpose.However, the RBI has put certain conditions for availing the benefits of relaxed norms.
‘Minimum paid-up equity of 25 per cent should be held directly by the lender (overseas partner),’ the RBI said.
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