Last year, the draft regulations were issued in relation to the ECB regulations. After making certain changes in the draft regulations, RBI has finally unveiled the new ECB regulations.
If you are involved in ECBs for which an LRN has not been obtained, then it is recommended to
reassess the documents in light of the new ECB regulations.
Key Changes vis-à-vis draft regulations:
1) Welcome change in the definition of “Designated Authorised Dealer Category I Bank” which does not restrict it to banks with which the ECB borrower maintains the current account.
2) Much needed clarity on the definition of “real estate business”. This is also supported by the fact that RBI has provided a detailed definition of the real estate business and does not relate it back to FDI guidelines.
3) NBFCs including NBFCs in retail sector can continue to borrow ECBs under the new ECB regulations.
4) Cost of borrowing has been linked to prevailing market conditions and unlike the draft regulations, it is not subject to the satisfaction of the “Designated Authorised Dealer Category I Bank”.
5) No requirement under refinancing as regards all-in-cost / spread to be lesser than original ECBs (as appearing in the draft regulations).
We are further analysing the new ECB regulations, and our detailed assessment shall be shared in the coming days on the same.
For further details, please see:
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
