9 April, 2019
The ECB framework ordinarily restricts proceeds from an ECB to be applied for repayment of rupee term loans. Through a recent circular released on 7 February 2019, the RBI relaxed this end use restrictions and has permitted resolution applicants pursuant to a CIRP to raise ECBs from recognized lenders and apply such ECB proceeds for repayment of rupee term loans of the company under resolution, on an approval basis.
For raising ECBs, applicant companies will need to forward the proposals to the RBI through their authorized dealer. It enables companies under insolvency and bidders in resolution processes to have a wider range of financing options for funding the resolution process. However, the ECBs under this route cannot be raised from branches or overseas subsidiaries of Indian banks.
For more information, please contact:
Sameer Sibal, Partner, Jerome Merchant + Partners
sameer.sibal@jmp.law
