MANU/RPRL/0010/2019
Ministry : Reserve Bank of India
Department/Board : RBI
Press Release No. : 2018-2019/1673
Date : 16.01.2019
Notification/ Circulars Referred : FEMA 3 R/2018 MANU/RFEM/0008/2018;A. P. (DIR Series) Circular MANU/APDR/0001/2019
Citing Reference:
FEMA 3 R/2018 MANU/RFEM/0008/2018 Referred
A. P. (DIR Series) Circular MANU/APDR/0001/2019 Referred
RBI announces the New External Commercial Borrowings (ECB) Framework
As part of the on-going efforts at rationalising multiple regulations framed under FEMA 1999 over a period of time, the regulations governing all types of borrowing and lending transactions between a person resident in India and a person resident outside India, both in foreign currency and Indian Rupee, have been consolidated and the Revised Regulation FEMA 3 R/2018 has been notified by the Government of India on December 17, 2018.
In line with the above revised regulation, it has now been decided, in consultation with the Government of India, to rationalise the extant framework for ECB and Rupee denominated bonds to further improve the ease of doing business. An A. P. (DIR Series) Circular on the new ECB policy has been issued today incorporating the new framework. Major liberalisation/rationalisation in the new framework are as under:
i. Tracks I and II under the existing framework are merged as "Foreign Currency denominated ECB" and Track III and Rupee Denominated Bonds framework are combined as "Rupee Denominated ECB" to replace the current four-tiered structure. The framework is instrument-neutral.
ii. The list of eligible borrowers has been expanded. All entities eligible to receive foreign direct investment can borrow under the ECB framework.
iii. Any entity who is a resident of a country which is FATF or IOSCO compliant will be treated as a recognised lender. This change increases the lending options and allows various new lenders in ECB space while strengthening the AML/CFT framework.
iv. The minimum average maturity period (MAMP) has been kept at 3 years for all ECBs, ........