External commercial borrowings

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manish shah (Querist)
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21 December 2013 I am working for ECB proposal of my client Pvt Ltd company . Understood FDI policy / FEMA - sectorial restrictions . Not having following info

1. ECB for real estate sector can we apply in approval route ?

2.ECb tenure for 36 months : - while booking f/w contract for currency flucation -bankr issue coverage only for 12 months - if we roll on same for 3 times ( to cover 36 months ) it is very costly - proposal loses it feasibility .

Please provide me your imputon the subject

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 December 2013 1. ECB in real estate is allowed only for Low cost housing (even under approval route). Beyond the low cost housing other real estate projects cannot be considered even approval route. please refer https://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8101#S18

2. can't help. But consider it this way what if the banker charges you more for the longer period. the difference should not be much on account of roll over.

manish shah

manish shah (Querist)
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23 December 2013 Thanks Nikhil ,

I am not getting clarity from bankers also whether they can provide me F/w contract for more than 12 months . I have read in RBI sites that Offshore branch can provide F/w service to Indian customer . I

f so looking for cost effective solution from International banker like CITI , HSBC being my source of lender is from US .

If you can put more light on the subject matter it will be very useful for me .

Nikhil Kaushik

Nikhil Kaushik (Expert)
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23 December 2013 Dear Manish,

Yes banks can provide you hedging contracts with maturity of more than a year. The only restriction placed by RBI is that the term of the hedge cannot exceed the term of the ECB.

manish shah

manish shah (Querist)
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23 December 2013 thanks a lot .

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