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Policy

The Government of India permits Indian corporate to raise finance through Ecus for the expire experience  of existing capacity as well as for fresh  vestment. They can raise Ecus only from international  ally recognized sources such as banks; export credit .agencies, suppliers of  equipment, foreign co laboratory policyholders, international capital markets and so on.

However, Ecus from unrecognized sources are not   remitted. The ECU policy of the Government seeks to keep an annual cap ceiling on access to Ecus consistent with prudent management. It  ls’ gives greater priority to projects i  the infrastructure, core and export sectors. Public’ financial institutions (Pals) are also expected t give   priority to the needs of medium/small scale units through their sub-lending, against E approvals. However, Trusts/non-profit making  organisations are not eligible to raise Ecus. Units i Special Economic Zones (SE’s) are permitted to use Blunderbuss a special window.

Average Maturities for Ecus 

The minimum average maturities should be: (j) three years and five years for all sectors, excel  100 per cent Sous (export oriented units), of  CBS unto 20,million and more than 20 million ecu divalent dollars, respectively, (ii) for Sous, three years for any Arno and (iii)   TBS/fens can b raised in tranches of different maturities as long as the average maturity of the different tranche  within the same overall  approval taken together satisfied$ the maturity criteria prescribed in the Eel  Guidelines. It is expected that longer, term borrowings would   necessarily precede that of ht shorter terms. The longer the initial tenor, the shorter the subsequent tranches can be within 4th average   maturity. Average maturity means the weighted average of all disbursements, taking lace disbursement individually and its period of   retention by the borrower. A borrower can raise up t< a maximum of 50 million dollars under the automatic route, without the prior   approval or the Nongovernmental, during a financial year. In

case a borrower decides to raise more than one E Cl  in a given financial year, for  CBS up to 20 million dollars, the mi mum average maturity wok be three years. for amounts in excess of 20 million dollars, the average   maturity would need to be five years. .  With effect from March ,unfits in SE’s are permitted to avail  Ecus of less than three ‘years   maturity/without any maturity restrictions but tollbooth recognized banking channels and strictly on a ‘stand alone basis’. It means that such  nits would be complete l isolated from  financial contracts with their subsidiaries/parents in the, main land/within the SE’s as far 3  repayment ‘of ECU principal/interest is concerned. Thus, only units that are either a. subsidiary branch oaf company registered outside

  India or where a company ‘is registered independently for ,operating in one/more zone in the country would qualify for ‘stand alone’   criteria. Borrowers who raise BEG under the special window have to service the loan (priNcipal plus interest plus any other  fee Charge) out  f proceeds generated by SEX units. There is an annual cap of 500 million dollars  for such SEZ units to avail this facility. The RBI would  monitor the overall cap.

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