Sources of External Commercial Borrowings - International Finance, Interdisciplinary issues in India Video Lecture | Interdisciplinary Issues in Indian Commerce - B Com

[Music]
hello friends in this session we shall
discuss external commercial boring what
is external commercial boring in short
we call it ECB when ECB is the boring
buy eligible resident entity from a
recognized non-resident entity so we
have an indian entity it borrows money
from outside the country an Indian
company boring money from outside the
country so resident entity boring money
from non-resident entity so that is
called external commercial borrowing
what are different forms of ECB ECB can
be in the form of bank loans it can be
floating rate of nodes it can be fixed
rate bonds it can be professors both
convertible and non-convertible it can
be debentures both non convertible and
convertible it can be foreign
conceivable bonds FC CDs and it can be
various other forms also so when an
Indian company an Indian entity is
boring money from outside the country
this is called external commercial
boring there are two routes for external
commercial boring the one route is
called automatic route automatic route
means where no permission is required to
borrow this money
the other one is approval route in a
proof route the permission is required
either from Government of India or from
Reserve Bank of India types of ECB so
ECB can be of three types called tracts
so tack one ECB it is medium term of
foreign currency external commercial
boring so it is in foreign currency it
is in medium term it's a maturity
minimum is 3 or 5 years track to long
term foreign currency ECB so here the
boring is in foreign currency it is for
a long period and minimum average
maturity is a 10 years the third track
is Indian rupee denominated ECB here ECB
will be in Indian currency and the da
minimum average maturity is 3 to 5 years
now let us see the rules relating to
minimum average maturity period tack one
when amount is up to 50 million u.s.
dollars or its equivalent the minimum
mature the average maturity should be 3
years when amount is more than US dollar
is 50 million then minimum average
maturity is 5 years
for attack 2 as we have already seen the
minimum average maturity is a 10 years
for track 3 it is according to track 1
so depending upon the amount it will be
the average maturity
now let us see what our individual
limits under automatic route not under
approval route any amount which you
false beyond automatic route it will
require approval so individual limits in
respect of different segments first for
infrastructure sector and for
manufacturing sector this limit is US
dollar fifty seven fifty million or
equivalent remember this amount can be
changed by Government of India or RBI
anytime so for infrastructure and
manufacturing it is up to 750 million
u.s. dollars or equivalent if it is for
software development sector then the
amount is restricted to US dollars two
hundred million or equivalent if it is
for microfinance
activities the amount is restricted to
US dollars 1 million dollars or
equivalent if it is meant for a little
startup then up to 3 million or
equivalent amount and for those which
have not been specified means for other
entities it is up to 5 million US
dollars or equivalent thank you friends
for watching this video I am sure the
contents will benefit you