RBI relaxes norms to raise funds via ECBs

Tags: News
Relaxing norms to raise money via external commercial borrowings (ECBs), the Reserve Bank has allowed firms in manufacturing, hospitals, infrastructure, hotels, and software sector to raise foreign capital from foreign/indirect equity holders without its approval.

As per the extant ECB policy, ECBs from direct foreign equity holders (FEHs) are considered both under the automatic and the approval routes.

ECBs from indirect equity holders and group companies and ECBs from direct FEH for general corporate purpose are, however, considered under the approval route.

Besides, any request for change of the ECB lender in case of FEH requires RBI's approval.

"As a measure of simplification of the existing procedure, it has been decided to delegate powers to banks to approve proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies under automatic route," RBI said in a notification.

Raising ECB for companies in miscellaneous services from direct/indirect equity holders and group companies are also allowed to raise funds through this facility.

Miscellaneous services are like training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector.

Trading business, logistics services, financial services and consultancy services are, however, not covered under the facility, RBI said.

ECB proposals involving change of lender when the ECB is from FEH, direct/indirect equity holders and group company is also covered under this arrangement, RBI added.

"These changes will come into force with immediate effect," RBI notification said.

EDITORIAL OF THE DAY

  • Census shows urgent steps are needed to dispel rural despair

    The much delayed Socio-Economic and Caste Census, 2011, has finally seen the light of day, and going by its conclusions, it couldn’t have come a day

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Urs Schoettli

Economic integration in east Asia

As trade agreements within a global framework have become increasingly ...

Rajgopal Nidamboor

Up the ante of your conscious existence

It sounds cryptic, but is not as complex as it ...

Gautam Gupta

The ‘fake’ issue needs to be taken seriously

E-commerce players are witnessing unbelievable growth globally. Competition is increasing ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture