End Use Requirements
the ECBs can be used for any purpose except investment in (i) real estate and (ii) the capital market. To promote disinvestment programme of PSU shares, ECB proceeds can be used in the first stage acquisition of shares in the disinvestment process hy Indian bidders and also in the mandatory second stage offer to the public, under the SEBI Substantial Acquisition of Shares and Takeovers Regulations. ith effect from September 2002, the restriction on end-use of ECB proceeds for investment in the real estate sector has been dropped .. CBs an be raised for the development of integrated townships within the existing maturity guidelines that are discussed in subsequently this chapter. Corporates raising ECBs may retain the funds abroad in a bank account or other future forex requirements, subject to the following (a) The debits in the account should only be for the approved purposes for which the loan is raised; (b) Payment to the overseas supplier should be made against usual import documents,
including Bill of Lading! Airway Bill. Further, documentary evidence in upport of imports into India should be submitted to the RBI, duly cenJied by a chartered accountant; (c) The deposit held abroad should ot e utilised for any “fundbased/non-fund based facilities in India and (d) The account should.be closed as soon as the forex requirements are e! andany unspent balance should be repatriated to India immediately.
Within eight days of the opening of the account, the following etails should be submitted to the RBI: (j) Name of the bank and branch, (ii) Date of opening and account number, (iii) Name of the borrower, (iv) Name of the lender, (v) govemment/RBI approval number/date, (vi) RBI registration number (vii) Purpose of loan, (viii) mount of loan, (xi) Amount in equivalent dollars and (x) Amount parked. abroad