What changed
Previously, Multi-State Co-operative Societies were not eligible for ECB under the Approval Route. This circular extends eligibility to those engaged in manufacturing, provided they meet solvency and documentation requirements.
What it means for you
Banks must now process ECB proposals from manufacturing Multi-State Co-operative Societies under the Approval Route, ensuring they meet all standard ECB parameters. This expands the borrower base for foreign borrowing, potentially increasing demand for AD bank services.
What you must do
- Update internal ECB eligibility checklists to include Multi-State Co-operative Societies engaged in manufacturing.
- Verify financial solvency and obtain up-to-date audited balance sheets from such societies before processing proposals.
- Ensure all ECB proposals from these societies comply with existing guidelines on recognized lenders, end-use, maturity, and all-in-cost ceilings.
- Communicate this change to relevant constituents and customers.
Who it affects
Authorised Dealer banks, Multi-State Co-operative Societies engaged in manufacturing, Borrowers seeking ECB under Approval Route
What are the key conditions for a Multi-State Co-operative Society to raise ECB?
The society must be financially solvent, submit up-to-date audited balance sheets, and comply with all other ECB parameters like recognized lender, permitted end-use, average maturity, and all-in-cost ceilings.
Does this circular apply to all co-operative societies?
No, it specifically applies to Multi-State Co-operative Societies engaged in manufacturing activity. Other co-operative societies are not covered by this circular.
What route must be used for these ECB proposals?
All proposals must be submitted under the Approval Route, meaning they require prior RBI approval.