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

  • Common test will safeguard sanctity and bring accountability to medical profession

    Recalling its order of 2013, the Supreme Court paved the way for the all-India common entrance test, the national eligibility-cum-entrance test (NEET)

FC NEWSLETTER

Stay informed on our latest news!

TODAY'S COLUMNS

Amita Sharma

Political rhetoric makes for counter poetry

Poetic flourishes flavour politics. Ghalib and Hafez flowed profusely to ...

Zehra Naqvi

Watch your words, for they can kill

You must’ve heard the ph­rase ‘if looks could kill’. Ever ...

Dharmendra Khandal

Biodiversity day has come and gone. Yet again

Every year on May 22, world celebrates international biodiversity day. ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture