Short Term Loan
While ECBs for a minimum maturity of three· years and above are sanctioned by the DEA, approvals of short-term foreign currency loans with a maturity of less than three years is sanctioned by the RBI, according to the RBI guidelines.
Validity of Approval
Approvals are valid for a period of six months, that is, the executed copy of the loan agreement is . required to be submitted within this period. In the case of FRNs and bonds, the same are required to be launched within this period. In the case of power projects, the validity of he approval is for a period of .one year and in the case of the' telecom sector it is 9 months. Bonds, debentures, FRNs and other such instruments have an additional validity period of three months for all the ECB approvals, across the board. No extensions are granted beyond the validity period. However, borrowers are-free to submit a fresh application after a gap of one month from the expiry of the validity period, which would be evaluated in the light of the ECB guidelines applicable at that time. In. case of infrastructure projects, however, because financial closure. may be delayed for reasons beyond the investor's control, the extension of validity may be considered on the basis of merit."