New ECB policy opens doors for foreign capital inflows

By Devashree Limaye and Medha Unadkat, SNG & Partners
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To improve the ease of doing business, the Reserve Bank of India (RBI), in consultation with Government of India, notified a new framework for external commercial borrowings (ECB) on 16 January 2019. The new ECB framework has made significant changes and has liberalized the manner in which Indian entities can raise ECBs.

The changes were brought about to consolidate RBI’s regulations governing all types of borrowing and lending transactions between a person resident in India and a non-resident in both foreign currency and Indian rupees.

Devashree Limaye id
Devashree Limaye
Associate
SNG & Partners

The new framework has merged the existing tracks under which ECBs can be raised. Track I and track II, which dealt with medium-term and long-term foreign currency ECBs, have been merged into a single track, foreign currency-denominated ECBs. Track III, which dealt with Indian rupee denominated ECB’s and the framework in respect of rupee denominated bonds issued overseas (masala bonds), have been merged into rupee-denominated ECBs. With the merging of tracks and bringing masala bonds within the ECB framework, the RBI has simplified the process of raising funds.

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SNG & Partners has offices in New Delhi, Mumbai and Singapore. Devashree Limaye is an associate and Medha Unadkat is a legal consultant.

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