UPDATE ON FEMA, 1999

Draft ECB Guidelines Issued by the Reserve Bank of India

The Reserve Bank, with a view to liberalize the External Commercial Borrowings (“ECB”) norms has issued a draft inviting public comments in respect of the changes which the Government is proposing to make in the existing ECB guidelines. The key changes proposed under the draft have been listed herein below:

1. The list of recognised lenders is to be expanded to include entities having long term interest in India.
2. A negative list is to be prescribed for end uses of long term foreign currency borrowings i.e. borrowings with minimum maturity of 10 years.
3. More liberal conditions would be prescribed for rupee denominated ECBs with only minimum maturity stipulations. Further, the borrowing can be accessed for all purposes expect a negative list, to be prescribed.