The Reserve Bank of India has said that external commercial borrowings cannot be used for working capital, general corporate purpose or repayment of existing rupee loans.
This will apply for borrowings raised after the revised ECB guidelines that were issued on January 31.
RBI has also said that offshore banking units cannot raise deposits from resident Indians. This means that residents who can otherwise invest $25,000 overseas under the liberalised remittance regime, cannot use the offshore banking unit route.
Before February 1 `04 , eligible borrowers were permitted to raise external commercial borrowings under the automatic route equivalent to $50 million per financial year for general corporate purpose. The revised guidelines allow annual borrowings upto half a billion dollars under the automatic route.
The central bank has also clarified that borrowers availing ECB after February `04 are required to submit returns on a monthly basis certified by the designated Authorised Dealer (AD) to RBI within seven working days from month-end of the borrowing.
The central bank has said that the responsibility to ensure that ECB raised/utilised are in conformity with the Reserve Bank instructions is that of the concerned borrower. The authorised dealer who certifies the returns filed by the borrower is also responsible for compliance of the ECB guidelines.
The Reserve Bank of India has said that it has empowered authorised dealers to approve elongation of repayment periods for external commercial borrowings under the erstwhile $5 million scheme provided there is a consent letter from the overseas lender for such rescheduling without any additional cost.
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