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."

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