What is the difference between fdi and ecb

Any other direct capital is not allowed in ECB. Save my name, email, and website in this browser for the next time I comment. Check your mailbox for the joining link.

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Powered by iPleaders. Register now Name. ECB proceeds raised under Track I needs to be utilized for capital expenditure in the form of : i. For the purpose of raising ECB the definition of infrastructure will be as provided under Harmonised Master List of Infrastructure sub-sectors and Institutional Mechanism for its updation approved by Government of India vide Notification F.

The ECB proceeds can be utilized for any purpose other than those specifically prohibited. All ECB loan agreements entered into before December 02, may continue with the disbursement schedules as already provided in the loan agreements without requiring any further consent from the RBI or any AD Category I bank.

However, as per P. Dir Series Circular No. The end-use of funds should be monitored by the designated AD-Category I bank. No guarantee in any form will be given by the Banks in India. The borrower needs to comply with all other conditions relating to eligible borrowers, recognized lenders, all-in-cost etc.

In case of Companies, only those who qualify as an eligible borrower are allowed to accept ECB under the Automatic Route under the respective tracks allotted.

This means Corporate, including few in services sector, and Infrastructure Finance Companies except financial intermediaries, such as banks, financial institutions, Housing Finance Companies. Companies in infrastructure sector. Companies engaged in miscellaneous services viz. Also refer the carve out available to manufacturing sector under Question Corporate engaged in miscellaneous services viz.

Individual limit for service sector has been stipulated of USD million or equivalent under automatic route. Corporate in the services sector can avail of ECB beyond USD million or its equivalent in a financial year under approval route. NBFCs could obtain ECB under the approval route, with minimum average maturity of 5 years, from multilateral financial institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of infrastructure equipment for leasing to infrastructure projects.

However, the same was subject to fulfillment of compliance norms as stipulated by the Reserve Bank via DNBS circular dated February, and hedging of the currency risk in full. HFCs while making the applications, shall submit a certificate from NHB, the nodal agency, that the availment of ECB is for financing prospective owners of individual units for the low cost affordable housing; ensure that cost of such individual units does not exceed Rs.

CC No. The ECB availed of by developers and builders shall be swapped into Rupees for the entire maturity on fully hedged basis. Overseas long term investors such as: a. Pension funds; c. Insurance companies; d. Sovereign Wealth Funds; e.

Minimum paid-up equity of 25 per cent should be held directly by the lender; ii. Further, by way of P. Remittance is permitted as per the Policy on Advance Remittances approved by the Board of Directors of the bank or with the specific approval of the Board of Directors of the bank.

If required, the deposit amount may be adjusted towards lease rentals. However, the balance security deposit, if any, should be repatriated before expiry of the lease period. Ensuring that the period of such corporate guarantee is co-terminus with the lease period.

Further, the Reserve Bank videNotificationNo. Operating leasing or Asset Renting entity render the service of providing the asset on operating lease. The lessor has the legal title as well as the economic ownership. Being companies engaged in miscellaneous services viz.

Yes, financial lease [11] , is also treated as ECB. ECB includes commercial loans in the form of securitized instruments like floating rate notes, fixed rate bonds etc. Thus raising money by way of securitisation from non-resident investors will be treated as ECB.

The forex exposure of following borrowers needs to be fully hedged If IFCs has availed of credit enhancement facility and the same gets invoked, then in case the novated loan is designated in foreign currency, the IFCs should hedge the entire foreign currency exposure. In case of other borrowers, hedging of ECB can be optional. The entities raising ECB under the provisions of Tracks I and II are required to follow the guidelines issued, if any, by the concerned sectoral or prudential regulator with regard to hedging.

In case of domestic debt raised through issue of capital market instruments, such as debentures and bonds, by all borrowers eligible to raise ECB under the automatic route subject to fulfillment of certain conditions Viz.

Keeping in view the special funding needs of the infrastructure sector, take-out financing arrangement through ECB, under the approval route , has been permitted for refinancing of Rupee loans availed of from the domestic banks by eligible borrowers in the sea port and airport, roads including bridges and power sectors for the development of new projects, subject to the following conditions: The corporate developing the infrastructure project should have a tripartite agreement with domestic banks and overseas recognized lenders for either a conditional or unconditional take-out of the loan within three years of the scheduled Commercial Operation Date COD.

The scheduled date of occurrence of the take-out should be clearly mentioned in the agreement. The loan should have a minimum average maturity period of seven years. The domestic bank financing the infrastructure project should comply with the extant prudential norms relating to take-out financing.

The fee payable, if any, to the overseas lender until the take-out shall not exceed bps per annum. On take-out, the residual loan agreed to be taken out by the overseas lender would be considered as ECB and the loan should be designated in a convertible foreign currency and all the extant norms relating to ECB should be complied with. The domestic bank will not be allowed to carry any obligation on its balance sheet after the occurrence of the take-out event.

Reporting arrangement as prescribed under the ECB policy should be adhered to. The Designated AD bank has general permission to make remittances of installments of principal, interest and other charges in conformity with the ECB guidelines. Alternatively, Conversion of ECB into equity is permitted subject to the following conditions:- The activity of the company is covered under the Automatic Route for Foreign Direct Investment or Government FIPB approval for foreign equity participation has been obtained by the company, wherever applicable.

The foreign equity holding after such conversion of debt into equity is within the sectoral cap, if any, as specified under the Consolidated FDI Policy issued by DIPP from time to time. Once reported, filing of Form ECB — 2 in the subsequent months is not necessary.

Cancel reply Leave a Comment Your email address will not be published. Latest Posts. Popular Posts. Featured Posts. Investors recently have been unimpressed by the frothy valuations in some pockets of the global markets and the slower-than-expected rollout of Covid vaccines. Jain says selling by FIIs — who are normally net buyers in India — creates a window of opportunity for investors to put in capital they can spare for the long term at low valuations.

On 9 March , the Sensex fell by 1, Despite a large decline in their share prices, shares of YES Bank actually have some value.

However, the same cannot be true for DHFL. Most investors can simply avoid these stocks. Those who are interested in them must do their own due diligence before investing in them. If you hold more than shares of Yes Bank, you are locked in for 3 years. From Monday 16th March , whatever new shares you buy, you will be able to freely sell them.

Yes Bank share price today has crossed the Rs mark. Kumar said the bank was targeting reduction in rents, a major operational overhead for lenders, by 20 per cent through the exercise. It will be shutting down 50 branches as part of a rationalisation effort, which will reduce its overall network in FY21 as there will be no new openings, Kumar said. Your money with Yes Bank is absolutely safe, Shaktikanta Das tells depositors.

Putting to rest any such theories, the SBI boss said that merging Yes Bank with SBI would just not have been possible because of the cultural gulf between the two banks.