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.