03 Sep 2019

With a view to attract further foreign investments into India, especially considering the slow-down in the Indian economy, the Reserve Bank of India (RBI) brought out certain relaxations on the end-use restrictions placed on External Commercial Borrowings[1] vide Circular RBI/2019-20/20 A.P. (DIR Series) Circular No. 04 dated 30th July, 2019[2] (hereinafter ‘the Circular’). Transactions on account of External Commercial Borrowings (ECB) and Trade Credit (TC) are governed by Section 6(3)(d) of the Foreign Exchange Management Act, 1999 (FEMA). In furtherance thereto, the RBI had brought out the ‘Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations’[3] which encapsulates the detailed provisions and stipulations in relation to ECB.>>

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