External commercial borrowing

Press Release - Permitting companies in the aviation sector to avail of External Commercial Borrowing (ECBs) for working capital requirements (724 KB)

Press Release - Allowing ECB for Capital Expenditure on the Maintenance and Operations of Toll systems for Roads and Highways(563 KB)

Press Release - in ECB Policy relating to Refinancing of Rupee Debt for Power Sector(595 KB)

Press Note: Amendment to the "Issue of Foreign Currency Convertible Bonds and Ordinary (through Depository Receipt Mechanism) Scheme, 1993" (71 KB)

Master Circular on ECB and Trade Credits dated July 01, 2010 issued by RBI under FEMA, 1999

Methods of accessing funds from abroad as debt:

External Commercial Borrowings (ECB) refer to commercial loans in the form of bank loans, buyers' credit, suppliers' credit, securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares) availed of from non-resident lenders with a minimum average maturity of 3 years.

Foreign Currency Convertible Bonds (FCCBs) mean a bond issued by an Indian company expressed in foreign currency, and the principal and interest in respect of which is payable in foreign currency. Further, the bonds are required to be issued in accordance with the scheme viz., "Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993", and subscribed by a non-resident in foreign currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or in part, on the basis of any equity related warrants attached to debt instruments. The ECB policy is applicable to FCCBs.

Preference shares (i.e. non-convertible, optionally convertible or partially convertible) for issue of which, funds have been received on or after May 1, 2007 would be considered as debt and should conform to policy.

Foreign Currency Exchangeable Bond (FCEB) means a bond expressed in foreign currency, the principal and interest in respect of which is payable in foreign currency, issued by an Issuing Company and subscribed to by a person who is a resident outside India, in foreign currency and exchangeable into equity share of another company, to be called the Offered Company, in any manner, either wholly, or partly or on the basis of any equity related warrants attached to debt instruments. The FCEB must comply with the "Issue of Foreign Currency Exchangeable Bonds (FCEB) Scheme, 2008", notified by the Government of India, Ministry of Finance, Department of Economic Affairs vide Notification G.S.R.89(E) dated February 15, 2008. The guidelines, rules, etc governing ECBs are also applicable to FCEBs.

ECB Policy as on 23/09/2010

ECBs are being permitted by the Government as an additional source of finance to augment the resources available domestically to Indian corporate for financing import of capital goods, new projects, modernization / expansion of existing production units in real sector - industrial sector including small and medium enterprises (SME) and infrastructure sector - and in the services sector viz. hotels, hospitals and software companies for import of capital goods, for foreign currency and / or rupee capital expenditure. ECBs are approved within an overall annual ceiling, consistent with prudent debt management. End-uses of ECB for working capital, general corporate purpose and repayment of existing rupee loans are not permitted.