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With reference to the Indian Economy, which one of the following statements regarding External Commercial borrowings is correct?
- a)It refers to commercial loans availed from non-resident lenders with a minimum average maturity of 10 years.
- b)It can be accessed only under Approval Route.
- c)Individuals and Non-Profit making Organisations are not eligible to raise External Commercial Borrowing.
- d)Refinancing of External Commercial Borrowing by raising a fresh ECB is not allowed in India.
Correct answer is option 'C'. Can you explain this answer?
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With reference to the Indian Economy, which one of the following stat...
Explanation:
External Commercial Borrowings (ECBs) are commercial loans raised by eligible residents from non-resident lenders. These loans can be accessed by eligible entities in India for various purposes such as import of capital goods, new projects, modernization/ expansion of existing production units, etc.
Option (a) is incorrect because there is no minimum average maturity requirement for ECBs. Borrowers can choose the maturity of the loan based on their needs and the terms offered by the lender.
Option (b) is incorrect because ECBs can be accessed under either the Automatic Route or the Approval Route. Under the Automatic Route, borrowers can raise ECBs without prior approval from the Reserve Bank of India (RBI), subject to certain conditions. Under the Approval Route, borrowers need to obtain prior approval from the RBI for raising ECBs.
Option (c) is correct because only eligible entities such as companies, limited liability partnerships (LLPs), and registered trusts can raise ECBs. Individuals and non-profit organizations are not eligible.
Option (d) is incorrect because refinancing of existing ECBs by raising a fresh ECB is allowed in India, subject to certain conditions.
In conclusion, option (c) is the correct statement regarding External Commercial Borrowings in the Indian economy.
External Commercial Borrowings (ECBs) are commercial loans raised by eligible residents from non-resident lenders. These loans can be accessed by eligible entities in India for various purposes such as import of capital goods, new projects, modernization/ expansion of existing production units, etc.
Option (a) is incorrect because there is no minimum average maturity requirement for ECBs. Borrowers can choose the maturity of the loan based on their needs and the terms offered by the lender.
Option (b) is incorrect because ECBs can be accessed under either the Automatic Route or the Approval Route. Under the Automatic Route, borrowers can raise ECBs without prior approval from the Reserve Bank of India (RBI), subject to certain conditions. Under the Approval Route, borrowers need to obtain prior approval from the RBI for raising ECBs.
Option (c) is correct because only eligible entities such as companies, limited liability partnerships (LLPs), and registered trusts can raise ECBs. Individuals and non-profit organizations are not eligible.
Option (d) is incorrect because refinancing of existing ECBs by raising a fresh ECB is allowed in India, subject to certain conditions.
In conclusion, option (c) is the correct statement regarding External Commercial Borrowings in the Indian economy.
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Community Answer
With reference to the Indian Economy, which one of the following stat...
Option c is the correct answer.
- Option a is incorrect: External Commercial Borrowings (ECB) refer to commercial loans [in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments (e.g. floating rate notes and fixed rate bonds)] availed from non-resident lenders with minimum average maturity of 3 years, not 10 years.
- Option b is incorrect: ECB can be accessed under two routes, viz., (i) Automatic Route and (ii) Approval Route. ECB for investment in real sector –industrial sector, especially infrastructure sector-in India, are under Automatic Route, i.e., do not require RBI/Government approval.
- Option c is correct: Corporates (registered under the companies Act except financial intermediaries (such as banks, financial institutions (FIs), housing finance companies and NBFCs) are eligible to raise ECB. Individuals, Trusts and Non-Profit making Organisations are not eligible to raise ECB.
- Option d is incorrect: The existing External Commercial Borrowing can be refinanced by raising a fresh ECB subject to the condition that the fresh ECB is raised at a lower all-in-cost and the outstanding maturity of the original ECB is maintained.
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With reference to the Indian Economy, which one of the following statements regarding External Commercial borrowings is correct?a)It refers to commercial loans availed from non-resident lenders with a minimum average maturity of 10 years.b)It can be accessed only under Approval Route.c)Individuals and Non-Profit making Organisations are not eligible to raise External Commercial Borrowing.d)Refinancing of External Commercial Borrowing by raising a fresh ECB is not allowed in India.Correct answer is option 'C'. Can you explain this answer?
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With reference to the Indian Economy, which one of the following statements regarding External Commercial borrowings is correct?a)It refers to commercial loans availed from non-resident lenders with a minimum average maturity of 10 years.b)It can be accessed only under Approval Route.c)Individuals and Non-Profit making Organisations are not eligible to raise External Commercial Borrowing.d)Refinancing of External Commercial Borrowing by raising a fresh ECB is not allowed in India.Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Indian Economy, which one of the following statements regarding External Commercial borrowings is correct?a)It refers to commercial loans availed from non-resident lenders with a minimum average maturity of 10 years.b)It can be accessed only under Approval Route.c)Individuals and Non-Profit making Organisations are not eligible to raise External Commercial Borrowing.d)Refinancing of External Commercial Borrowing by raising a fresh ECB is not allowed in India.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Indian Economy, which one of the following statements regarding External Commercial borrowings is correct?a)It refers to commercial loans availed from non-resident lenders with a minimum average maturity of 10 years.b)It can be accessed only under Approval Route.c)Individuals and Non-Profit making Organisations are not eligible to raise External Commercial Borrowing.d)Refinancing of External Commercial Borrowing by raising a fresh ECB is not allowed in India.Correct answer is option 'C'. Can you explain this answer?.
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