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In India a borrower can use _____% of the external commercial borrowing(ECB) to repay rupee debt.
  • a)
    15
  • b)
    20
  • c)
    25
  • d)
    30
  • e)
    49
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
In India a borrower can use _____% of the external commercial borrowin...
Borrowers can use 25 per cent of the ECB to repay rupee debt and the remaining 75 per cent should be used for new projects. A borrower can not refinance its entire existing rupee loan through ECB. The money raised through ECB is cheaper given near-zero interest rates in the US and Europe, Indian companies can repay part of their existing expensive loans from that. An ECB is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (public sector undertakings). ECBs include commercial bank loans, buyers' credit, suppliers' credit, securitised instruments such as floating rate notes and fixed rate bonds etc., credit from official export credit agencies and commercial borrowings from the private sector window of multilateral financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc. ECBs cannot be used for investment in stock market or speculation in real estate.
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