|
|
RBI liberalises security terms for External Commercial Borrowings- July 08
(b) Creation of Charge over Financial Securities
AD Category – I banks may convey their 'no objection' under FEMA, 1999 to the resident ECB borrower for pledge of shares of the borrowing company held by promoters as well as in domestic associate companies of the borrower to secure the ECB subject to the following conditions :
(i) The period of such pledge shall be co-terminus with the maturity of the underlying ECB.
(ii) In case of invocation of pledge, transfer shall be in accordance with the extant FDI policy.
(iii) A certificate from the Statutory Auditor of the company that the ECB proceeds have been / will be utilized for the permitted end-use/s.
(c) Issue of Corporate or Personal Guarantee
The ‘no objection’ to the resident ECB borrower for issue of corporate or personal guarantee under FEMA, 1999 may be conveyed after obtaining -
(i) Board Resolution for issue of corporate guarantee from the company issuing such guarantees, specifying names of the officials authorised to execute such guarantees on behalf of the company or in individual capacity.
(ii) Specific requests from individuals to issue personal guarantee indicating details of the ECB.
(iii) Ensuring that the period of such corporate or personal guarantee is co-terminus with the maturity of the underlying ECB.
AD Category – I banks may invariably specify that the ‘no objection’ is issued from the foreign exchange angle under the provisions of FEMA, 1999 and should not be construed as an approval by any other statutory authority or Government under any other laws / regulations. If further approval or permission is required from any other regulatory / statutory authority or Government under the relevant laws / regulations, the applicant should take the approval of the authority concerned before undertaking the transaction. Further, the 'no objection' should not be construed as regularizing or validating any irregularities, contravention or other lapses, if any, under the provisions of FEMA or any other laws or regulations.
<<< GO BACK TO FIRST PAGE ...Click here
Borrowers in services sectors eligible to avail ECB ...Click here
ECB Guidelines revision in May 2008 ...Click here
ECB Guidelines revision in May 2007 ...Click here
Special section on External Commercial Borrowings ...Click here
|
|
|
