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External Commercial Borrowings (ECB) in Indian Rupees

The recognized overseas ECB lenders who are able to mobilise Indian Rupees may extend Rupee denominated loans to Indian companies. The lenders may enter into back-to-back swap transaction with AD-Category-1 banks to facilitate Rupee denominated lending.

The recognized non-resident lender (financier from abroad)  approaches his overseas bank with a request for a swap rate for mobilising INR for onward lending to the Indian borrower. The lender has to submit appropriate documentation to the bank as evidence of an underlying ECB denominated in Indian Rupees. The overseas bank, in turn, approaches an AD Category-I bank for a swap rate along with documentation furnished by the customer that will enable the AD bank in India to satisfy itself that there is an underlying ECB in INR (scanned copies are acceptable). After satisfying itself about the existence of the underlying ECB in INR, the bank offer an indicative swap rate to the overseas bank which, in turn, will offer the same to the non-resident lender on a back-to-back basis. A KYC certification on the end client will be taken by the AD bank in India as a one-time document from the overseas bank. The continuation of the swap shall be subject to the existence of the underlying ECB at all times. On the due date, settlement may be done through the Vostro account of the overseas bank maintained with its counterparty bank in India.

The concerned AD Category-I bank shall keep on record all related documentation for verification by Reserve Bank.

Click here  to know ‘All info on External Commercial Borrowings’

(2) Comments

    1. Surendra NaikSurendra Naik - Post author

      The prices keep on changing as per the market scenario and are normally valid for a period of -30- days. The all-in-cost ceiling for raising Trade Credit is 350 basis points over 6 months LIBOR (for the respective currency of credit or applicable benchmark). The all-in-cost include arranger fee, upfront fee, management fee, handling/ processing charges, out of pocket and legal expenses, if any.

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