ECB guidelines amended

New Delhi, Aug 7 (UNI) The government today once again modified the guidelines for External Commercial Borrowings (ECB), including permitting ECB's of more than 20 million dollars per borrowing company only for foreign currency expenditure for permissible end-uses of ECBs.

The ECB policy is constantly reviewed by the Government in consultation with Reserve Bank of India (RBI) to keep it in tune with the evolving macro-economic situation, changing market conditions, sectoral requirements, the external sector and the lessons of experience.

Based on such review, the government has been modulating the capital inflows through ECB by modifying some aspects of the policy.

Henceforth, borrowers raising ECB more than 20 million dollars will be allowed to park the ECB proceeds overseas for use as foreign currency expenditure for permissible end-uses.

These modifications would be applicable to ECB exceeding 20 million dollars per financial year both under the Automatic Route and under the Approval Route.

ECB up to 20 million dollars per borrowing company would be permitted for foreign currency expenditure for permissible end-uses under the Automatic Route and these funds shall be parked overseas and not remitted to India.

Borrowers proposing to avail ECB up to 20 million dollars for rupee expenditure for permissible end-uses would require prior approval of the RBI under the Approval Route. However, such funds shall be continued to be parked overseas until actual requirement in India.

All other aspects of ECB policy such as 500 million dollars limit per company per year under the Automatic Route, eligible borrower, recognised lender, average maturity period, all-in-cost-ceiling, pre-payment, refinancing of existing ECB and reporting arrangements remain unchanged.

An official release here said these conditions will not apply to borrowers who have already entered into loan agreement and obtained loan registration numbers from the RBI.

''Borrowers who have taken verifiable and effective steps wherein the loan agreement has been entered into to avail of ECB in the previous dispensation, and not obtained the loan registration number, need to apply to the RBI through their Authorised Dealer,'' the release said.

These amendments in ECB policy will come into force with immediate effect, the release added.

UNI