Rbi update.

RBI Updates

Repayment of Rupee Loans and/or for fresh Rupee capital expenditure

Presently Indian companies in manufacturing and infrastructure sector and having foreign exchange earnings are allowed to avail of external commercial borrowing (ECB) for repayment of outstanding Rupee loans towards capital expenditure and/or fresh Rupee capital expenditure under the approval route. The overall ceiling for such ECBs is USD 10 billion. The maximum permissible ECB that can be availed of by an individual company is limited to 50 per cent of the average annual export earnings realised during the past three financial years. Further, the liability arising out of ECB has to be extinguished only out of the foreign exchange earnings of the borrowing company

Reserve Bank of India vide A.P. (DIR Series) Circular No. 26 dated 11th September, 2012 has now decided the following:

(a) to enhance the maximum permissible limit of ECB that can be availed of to 75 per cent of the average foreign exchange earnings realized during the immediate past three financial years or 50 per cent of the highest foreign exchange earnings realized in any of the immediate past three financial years, whichever is higher;

(b) in case of Special Purpose Vehicles (SPVs), which have completed at least one year of existence from the date of incorporation and do not have sufficient track record/past performance for three financial years, the maximum permissible ECB that can be availed of will be limited to 50 per cent of the annual export earnings realized during the past financial year; and

(c) The maximum ECB that can be availed by an individual company or group, as a whole, under this scheme will be restricted to USD 3 billion