RBI bars ECBs for working capital
By Our Banking Bureau | 03 Apr 2004
Mumbai: The Reserve Bank of India (RBI) has stated that external commercial borrowings (ECB) cannot be raised for working capital, general corporate purpose and repayment of existing rupee loan purposes.
The RBI has also clarified that the maximum amount of ECB that can be raised by an eligible borrower under the automatic route is $500 million or its equivalent during a financial year, up from the previous limit of $50 million.
"At present, borrowers who had availed themselves of ECB under the erstwhile $5-million scheme with specific approval of the Reserve Bank of India, can approach the RBI for elongation of repayment period," said the notification.
RBI has decided to delegate general permission to the designated bank to approve such elongation, provided there is a consent letter from the overseas lender for such re-schedulement without any additional cost.
