1. External Commercial Borrowings (ECB): ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The parameters apply in totality and not on a standalone basis. The framework for raising loans through ECB (herein after referred to as the ECB Framework) comprises the following three tracks:
Track I : Medium term foreign currency denominated ECB with minimum average maturity of 3/5 years.
Track II : Long term foreign currency denominated ECB with minimum average maturity of 10 years.
Track III : Indian Rupee (INR) denominated ECB with minimum average maturity of 3/5 years.
2. Forms of ECB: The ECB Framework enables permitted resident entities to borrow from recognized non-resident entities in the following forms:
i) Loans including bank loans;
ii) Securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares / debentures);
iii) Buyers’ credit;
iv) Suppliers’ credit;
v) Foreign Currency Convertible Bonds (FCCBs);
vi) Financial Lease; and
v) Foreign Currency Exchangeable Bonds (FCEBs)
3. Available routes for raising ECB: Under the ECB framework, ECBs can be raised either under the automatic route or under the approval route. For the automatic route, the cases are examined by the Authorised Dealer Category-I (AD Category-I) banks. Under the approval route, the prospective borrowers are required to send their requests to the RBI through their ADs for examination. While the regulatory provisions are mostly similar, there are some differences in the form of amount of borrowing, eligibility of borrowers, permissible end-uses, etc. under the two routes. While the first six forms of borrowing, mentioned at 2 above, can be raised both under the automatic and approval routes, FCEBs can be issued only under the approval route
