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.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Those willfully defaulting on loans should be blacklisted by Sebi

    As reported by this newspaper’s Monday edition, the Securities and Exchange Board of India (Sebi) has found merit in the Reserve Bank of India’s s

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Kumar Jain

Kickstarting technological innovation

One of the key dimensions of global competitiveness is the ...

Kuruvilla Pandikattu SJ

Developing moral, spiritual capacity

Writing in The Huffington Post, Noam Chomsky, professor emeritus, MIT ...

Gautam Gupta

Manufacturing must keep workers’ welfare in mind

It may be early days yet, but the labour reforms ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture