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External Commercial Borrowing (ECB) ECB is basically a loan availed by an Indian entity from a non-resident lender. Most of these loans are provided by foreign commercial banks and other institutions. It is a loan availed of from non-resident lenders with a minimum average maturity of 3 years.
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ECBs comprises of buyers’ credit, commercial bank loans, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings from Multilateral Financial Institutions. ECBs are being permitted by the Government as a source of finance for Indian Corporate for expansion of existing capacity as well as for fresh investment.
ECB = Commercial loans availed by eligible resident entities from recognized non-resident entities and should conform to parameters such as minimum maturity permitted and non-permitted end uses, maximum all-in-cost ceiling etc.
Below are the types of proposals for ECB are covered under the Approval Route
* For the respective currency of borrowing or applicable benchmark
FEMA lays down a sequence of penalties of regulations with respect to ECB are not complied with. Penalties for Contravention of Provisions of this act are dealt under Section 13 of the Foreign Exchange Management Act (FEMA)-
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