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1. Reserve Bank of India (RBI), in consultation with the Government of India (GoI), has rationalized the framework for External Commercial Borrowing (ECB) and Rupee Denominated Bonds and notified a new Policy.
2. Under the New Policy, all entities eligible to receive Foreign Direct Investment (FDI) are permitted to raise ECBs up to USD 750 million or equivalent per financial year under automatic route subject to certain terms and conditions prescribed in the Guidelines, replacing the system of sector wise limits.
3. The Minimum Average Maturity Period (MAMP) has been kept at 3 years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs as under the earlier framework, except the borrowers specifically permitted in the circular to borrow for a shorter period.
4. The ECB Policy framework has been incrementally calibrated over time considering the emerging financing needs of Indian companies, especially critical requirements of infrastructure sector entities, macroeconomic developments and to promote ease of doing business;
a. by permitting more resident entities as eligible borrowers,
b. recognizing more entities as lenders,
c. expanding end-uses and rationalizing the all-in-cost and
d. minimum maturity requirements for such borrowings.
5. Earlier Tracks I and II of the ECB Policy Framework have been merged as “Foreign Currency Denominated ECB” and Track III and Rupee Denominated Bonds framework have been combined as “Rupee Denominated ECB” to replace the four-tiered structure.
6. As per the new ECB framework, the list of eligible borrowers has been expanded to include all entities eligible to receive FDI.
7. Additionally, Port Trusts, Units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for profit companies, registered societies/trusts/cooperatives and non-government organizations can also borrow under this framework.