Companies LawLegal Updates

Applicants under CIRP can raise ECBs from recognised lenders, except from the branches/ overseas subsidiaries of Indian banks

IBBI & RBI Update

RBI had issued New External Commercial Borrowings Policy (to be referred as “ECB Framework”) dated January 16, 2019 ( A.P. (DIR Series) Circular No. 17 ) The New ECB Framework stated that the ECB proceeds cannot be utilised for repayment of domestic Rupee loans, except when the ECB is availed from a Foreign Equity Holder as defined in the aforesaid framework.

On 07 February, 2019 with the consultation with the Government, RBI relaxes the end-use restrictions for resolution applicants under the Corporate Insolvency Resolution Process (CIRP). RBI allows the resolution applicants to raise ECBs from the recognised lenders, except the branches/ overseas subsidiaries of Indian banks, for repayment of Rupee term loans of the target company under the approval route. 

Further, directs that the resolution applicants, who are otherwise eligible borrowers, can forward such proposals to raise ECBs, through their AD bank, to Foreign Exchange Department, Central Office, Mumbai of the Reserve Bank for approval.

RBI clarifies that the all the other provisions of the ECB policy remain to be unchanged.

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