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External Commercial Borrowings
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External Commercial Borrowings External Commercial Borrowings
  External commercial borrowing (ECB)
  Inter-Corporate Deposits ( ICD)
  Debt syndication for bigger projects/expansion plan etc
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  Debt Re-Structuring
  Standby letter of credit (SBLC)
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ECB (External Commercial Borrowings) is a mechanism used in India to assist the access to foreign money by Indian corporations and PSUs (Public Sector Undertakings). It include commercial bank loans, buyers' credit, suppliers' credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings from the private sector window of Multilateral Financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc. ECBs cannot be used for investment in stock market or speculation in real estate. For infrastructure and Greenfield projects, funding up to 50% (through ECB) is allowed. In telecom sector too, up to 50% funding through ECBs is allowed. It include bank loans, suppliers' and buyers' credits, fixed and floating rate bonds (without convertibility) and borrowings from private sector windows of multilateral Financial Institutions such as International Finance Corporation. External Commercial Borrowings Bank

The DEA (Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve Bank of India, monitors and regulates E. C. B. guidelines and policies. In India, External Commercial Borrowings are being permitted by the Government for providing an additional source of funds to Indian corporate and PSUs for financing expansion of existing capacity and as well as for fresh investment, to augment the resources available domestically. External Commercial Borrowings can be used for any purpose (rupee-related expenditure as well as imports) except for investment in stock market and speculation in real estate.

ECB GUIDELINES: The important aspect of ECB policy is to provide flexibility in borrowings by Indian corporate, at the same time maintaining prudent limits for total external borrowings. The guiding principles for ECB Policy are to keep maturities long, costs low, and encourage infrastructure and export sector financing which are crucial for overall growth of the economy. The ECB policy focuses on three aspects: 1. Eligibility criteria for accessing external markets. 2. The total volume of borrowings to be raised and their maturity structure. 3. End use of the funds raised.

ECB POLICY:

• ECBs are defined to include commercial bank loans, buyers' credit, suppliers' credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings from the private sector window of Multilateral Financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc.

• ECBs are being permitted by the Government as a source of finance for Indian Corporate for expansion of existing capacity as well as for fresh investment.

• The policy seeks to keep an annual cap or ceiling on access to ECB, consistent with prudent debt management.

• The policy also seeks to give greater priority for projects in the infrastructure and core sectors such as Power, oil Exploration, Telecom, Railways, Roads & Bridges, Ports, Industrial Parks and Urban Infrastructure etc. and the export sector.

• Applicants will be free to raise it from any internationally recognized source such as banks, export credit agencies, suppliers of equipment, foreign collaborators, foreign equity-holders, international capital markets etc. offers from unrecognized sources will not be entertained.

External Commercial Borrowings
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