Feme Compliance for External Commercial Borrowing

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Compliances for External Commercial Borrowings

External Commercial Borrowings are commercial loans raised by eligible resident entities from recognized non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The parameters given in FED Master Direction No.5/2018-19 dated 26 March 2019.

ECB can be raised in both Foreign currency denomination and Indian INR denomination.

FORBHITED  AREA FOR THE USE OF ECB 

a) Real estate activities.

b) Investment in the capital market.

c) Equity investment.

d) 2 Working capital purposes, except in case of ECB  specifically mentioned in circular.

e) General corporate purposes, except in the case of ECB mentioned at v(b) and v(c) above. f) Repayment of Rupee loans, except in case of ECB  specifically mentioned  in circular.at 

g) On-lending to entities for the above activities.

ECB Compliances

1. The borrower need to submit Duly Certified Form ECB with AD Category I bank for obtaining LRN.

2. The borrower required to report actual ECB transactions through Form ECB 2 Return through the AD Category I bank on a monthly basis, within 7 days from the end of Months.

PENALTY ON DELAY REPORTING

Sr. No.

Type of Return/Form

Period of delay

Applicable LSF

1.

Form ECB 2

Up to 30 calendar days from the due date of submission

INR 5,000

2.

Form ECB 2/Form ECB

Up to three years from the due date of submission/date of drawdown

INR 50,000 per year

3.

Form ECB 2/Form ECB

Beyond three years from the due date of submission/date of drawdown

INR 100,000 per year

 

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