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- All entities eligible to receive foreign direct investment (“FDI”);
- Port Trusts, SEZ units, SIDBI, EXIM Bank of India; and
- Entities engaged in micro-finance activities i.e. registered not for profit companies,
registered societies/ trusts/ cooperatives and non-government organisations.
No specific entities specified, so it is more generic now. Given below are the generic heads:
- A person resident in India (other than an individual) incorporated, established or
registered under Indian laws, provided permitted to borrow; - Entity under a restructuring scheme or corporate insolvency resolution process, if
specifically permitted thereunder; - Entity against whom any investigation, adjudication or appeal by a law enforcement
agency for contravention of any rule, regulation or direction is pending – subject to
adequate disclosures in the Form ECB 1.
- Resident of FATF or IOSCO compliant country
- Multilateral and Regional Financial Institutions where India is a member country
- foreign branches/ subsidiaries of Indian banks
- foreign equity shareholders
Simplified to cover:
SPONSORED
- A person resident outside India; or
- A branch outside India or in the International Financial Services Centre (IFSC) whose
lending business is regulated by the RBI; or - branch of a financial institution (including in the IFSC) as provided under the Foreign
Exchange Management (IFSC) Regulations, 2015.
Change from Indian Rupee (INR) to any freely convertible foreign currency (FCY) not
permitted.
Change from Indian Rupee (INR) to any freely convertible foreign currency (FCY) now
permitted.
- MAMP varied basis nature of business (e.g., manufacturing companies), nature of lender
(e.g., foreign equity holder), end use of the ECB (e.g., working capital purposes,
on-lending), etc. - Call and put options not be exercisable prior to completion of MAMP
Simplified for all ECBs
- All ECBs have an MAMP of 3 years
- Borrower in manufacturing sector – ECB MAMP between 1 year and 3 years, subject to
outstanding amount of such ECBs not being more than USD 150 million
Clarifications:
- call and put options not be exercisable prior to completion of MAMP
- ECB raised in manufacturing sector MAMP between 1 year and 3 years[2]
Exemptions to meet the MAMP requirements:
- Conversion of the ECB into non-debt instruments as per Foreign Exchange Management
(Non-Debt Instrument) Rules, 2019 (“Non-Debt Instruments Rules”) - Repayment of ECB using proceeds from non-debt instruments issued in terms of Non-Debt
Instruments Rules on repatriation basis, provided the proceeds are received after the
ECB drawdown - Any refinance as per the revised framework
- Waiver of debt by the lender
- Repayment resulting from corporate actions such as merger, demerger, etc.
- Provided separately for ECBs for FCY ECBs and INR denominated ECBs
- List of eligible forms of borrowing specified upfront (e.g., bank loans, debentures,
bonds, floating/fixed rate loans, convertible bonds, lease, etc.), foreign currency
convertible bonds (“FCCBs”) and foreign currency exchangeable bonds (“FCEBs”)
- Forms of borrowing simplified to include ECB in any form, provided it entails payment of
agreed interest and repayment of principal (including FCEBs and FCCBs). - Funds received from a person resident outside India, on or after April 30, 2007, against
issuance of preference shares or debentures which are not fully and mandatorily
convertible to equity shares.
Exemptions: Trade Credit with original maturity up to 3 years; Export advance received in
accordance with Foreign Exchange Management (Export of Goods & Services) Regulations, 2015;
Investments received in accordance with the provisions of Foreign Exchange Management
(Non-Debt Instrument) Rules, 2019 or Foreign Exchange Management (Non-Debt Instrument)
Rules, 2019.
- Borrowings limited to USD 750 million or equivalent per financial year.
- Borrowings have now been limited to the higher of: outstanding ECB up to USD 1 billion
(taking into account the proposed ECB, other than ECB for refinancing); or total
outstanding borrowing (external and domestic) up to 300% of the borrower’s net worth as
per its last audited balance sheet (excluding non-fund based credit and funds raised
through issuance of mandatorily convertible securities).
- Limit on the total cost of borrowings, in the form of All-In-Cost ceiling, ceiling on
prepayment premium - Spread within the parameters listed
- Maintenance of ECB Liability: Equity ratio for certain types of ECBs
- Borrowing costs linked to prevailing market conditions.
- In case of ECBs with maturity period of less than 3 years, the cost of borrowing to be
compliant with cost ceiling specified for Trade Credit under Part II of the Master
Directions.
- No concept of related party ECBs.
- Concept of equity shareholder only
- Introduction to ‘related party’ concept
- ECBs from any ‘related party’[3] permitted, provided it is undertaken on an ‘arm’s
length basis’[4]
- Charge over immovable assets, movable assets
- Corporate and personal guarantees
- Requirement of security clause in the documents
- prior NOC from existing lender necessary
- pledge of securities of the borrowing entity / domestic associate entities, only if held
by the promoter, is permitted - pledge of other securities only if held by the borrowing entity / its promoter, is
permitted - charge over current assets held by the borrower with ADs in India or its promoter, is
permitted
- security framework simplified to specify only the type of asset on which charge can be
created (e.g., immovable assets, movable assets, financial assets and intangible assets) - no specific restriction or provisions on the nature of the security provider
- issuance of guarantee provided it is in accordance with the Foreign Exchange Management
(Guarantees) Regulations, 2026 entities regulated by RBI not permitted to issue
guarantees
Additional considerations for security creation:
- The borrowing agreement must contain a clause to that effect;
- The security shall be co-terminus with the underlying ECB;
- NOCs from relevant lenders is obtained.
Permitted subject to certain conditions including that:
- outstanding maturity of the original borrowing is not reduced
- all-in-cost of fresh ECB is lower
- borrower is eligible to raise ECB
- Indian banks permitted to participate only for highly rated corporates (AAA) and for
Maharatna/Navratna public sector undertakings.
- Borrower permitted to refinance an existing ECB, in part or full, by a fresh ECB,
subject to ensuring that MAMP requirement applicable on the original ECB is met. - No other specific conditions on costs, etc. specified.
Conditions stipulated for conversion included the following:
- Necessary approvals if required under FDI policy, to be in place
- lender’s consent, without additional cost to lender
- adherence to applicable sector cap under FDI policy;
- compliance with applicable pricing guidelines;
- relevant reporting to the RBI (through Form FC-GPR / Form ECB 2 Return)
Conditions stipulated for conversion include the following:
- compliance with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019;
- no additional costs payable to the lender for enabling such conversion;
- consent of the ECB lender and all other lenders (or at least information regarding
conversions exchanged with other existing lenders); and - compliance with prudential regulations, including those on restructuring, if borrower
has availed credit facilities from RBI regulated entities.
- “Form ECB” – for obtaining the Loan Registration Number (LRN) and details of the ECB
- “Revised Form ECB” – for reporting changes in the ECB parameters, within 7 calendar days
from the date of such change - “Form ECB 2 Return” – for reporting monthly ECB transactions
- “Form ECB 1” – for obtaining the LRN and details of the ECB
- “Revised Form ECB 1” – for reporting any change in previously reported ECB parameters,
within 7 calendar days from the end of the month in which such change was given effect; - “Form ECB 2” is now required to be filed for reporting receipt of ECB proceeds and debt
servicing within 7 calendar days from the end of the month in which the proceeds were
received or debt servicing was undertaken.