ECB Revised Framework 2015 – Simplification For General Corporate Purposes

Introduction

External Commercial Borrowings, more commonly referred to as ECB, includes bank loans, buyers' credit, suppliers' credit, foreign currency convertible bonds, financial lease, foreign currency exchangeable bonds and securitized instruments which can be availed by specified Indian borrowers from recognized foreign lenders for the permitted end-uses under the regulations notified by the Reserve Bank of India ('RBI') from time to time. Any borrowing from a foreign lender, whose maturity period extends beyond three years, is eligible to qualify as an ECB. Due to the prolonged duration of such borrowings, they qualify as long term debts and thus, can be termed to be capital account transactions as defined under the Foreign Exchange Management Act, 1999.¹