TagECB Policy

Liberalization of RBI’s Policies

The Reserve Bank of India (RBI) last week issued a series of circulars liberalizing and streamlining its policies on various types of equity investments as well as on external commercial borrowings (ECBs). The key pronouncements are highlighted below: 1.         Foreign Investment in “Other Financial Services” In the case of non-banking finance companies...

RBI Introduces Rupee-Denominated Bonds Regime

[The following guest post is contributed by Vinod Kothari of Vinod Kothari & Co.] Continuing with some other recent moves to liberalise the options of raising debt from external sector, the Reserve Bank of India (“RBI”) on 29 September, 2015 announced new guidelines (the “Guidelines”) for issuance of rupee-denominated bonds (“RDBs”) overseas. The Guidelines are much more...

RBI’s Proposal for a Major Recast of ECB Norms

[The following guest post is contributed by Vinod Kothari of Vinod Kothari & Co. It deals with the details of the proposals announced by the RBI. In an earlier post, Pratik Datta sets out the background to RBI’s proposals] The Reserve Bank of India (RBI) has proposed a major recast of the norms for external commercial borrowings (ECBs). While India is still far from...

RBI’s Draft Framework on ECB: The Background

[This guest post is by Pratik Datta, who is a Consultant at the National Institute of Public Finance and Policy (NIPFP), New Delhi. He can be reached at prat.nujs@gmail.com.] Yesterday the Reserve Bank of India (RBI) released the draft framework for External Commercial Borrowing (ECB) for public comments on or before...

RBI Proposal on Rupee Linked Bonds

In the past, rupee denominated bond issuances have essentially been available to multilateral institutions, of which the International Finance Corporation (IFC) had availed of them. Now, the Reserve Bank of India (RBI) has announced a draft framework, which allows Indian companies as well to tap this avenue for raising debt. Indian corporates that are eligible to avail of external commercial...

RBI Circular on Security for External Commercial Borrowings

The Reserve Bank of India (RBI) prescribes stringent norms on external commercial borrowings (ECBs) as also the grant of security in favour of foreign lenders or suppliers who have extended ECBs to Indian borrowers. While clarity has been developing over the years, there has often been doubt regarding specific types of securities and guarantees to be granted. Now, the RBI has issued a circular...

Guest Post: RBI Circular on ‘Options’

[The following post is contributed by Parag Bhide, who is a Principal Associate at Universal Legal, Mumbai] Finally, Foreign Investors investing into India are able to include ‘options’ in their investment agreements. The Reserve Bank of India (“RBI”), through its circular dated 9 January 2013 (“Circular”) has legitimized inclusion of options/right to exit in the Investment Agreements.[1]...

RBI Clarification on Overseas Investment Norms

In a previous post, Satyajit had discussed the Reserve Bank of India’s (RBI) policy measures announced on August 14, 2013 to restrict overseas direct investments (ODI). Primarily, it was decided to reduce the ODI limits of a company from 400% of its net worth to 100%. Yesterday, the RBI announced some clarifications that mitigate the severity of the above restrictions. First, it clarified that...

ECBs by Corporates under Investigation

Hitherto, companies that are under investigation by law enforcement agencies such as the Directorate of Enforcement are not entitled to taken on external commercial borrowings (ECBs) under the automatic route, and are required to approach the Reserve Bank of India (RBI) for approval. Through a recent circular, the RBI has relaxed such position. Now, such entities under investigation are eligible...

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