What changed
Previously, only SEZ developers could access ECB for infrastructure within their zones. This circular extends the same facility to developers of National Manufacturing Investment Zones (NMIZs) under the approval route. The change is effective immediately from February 29, 2012.
What it means for you
Banks can now process ECB applications from NMIZ developers for infrastructure projects like power, roads, ports, and urban facilities within the zone. This opens a new funding avenue for large manufacturing hubs, but lenders must ensure compliance with all existing ECB parameters like maturity, cost, and reporting.
What you must do
- Update internal ECB policy manuals to include NMIZ developers as eligible borrowers under the approval route.
- Advise NMIZ developer clients about the new ECB facility and the documentation required for approval route applications.
- Ensure all ECB disbursements to NMIZ projects adhere to unchanged norms on recognized lenders, maturity, all-in-cost, and reporting.
- Monitor that infrastructure facilities funded via ECB are strictly within the NMIZ boundary as defined by the government.
Who it affects
Category-I Authorised Dealer Banks, NMIZ developers, Infrastructure companies operating within NMIZs, ECB compliance teams at banks
Can NMIZ developers use ECB for any type of infrastructure within the zone?
Yes, the circular allows ECB for the same list of infrastructure facilities as permitted for the broader infrastructure sector, including power, telecom, railways, roads, ports, industrial parks, urban infrastructure, mining, and cold storage.
Does this circular change any other ECB rules like all-in-cost or maturity?
No, all other aspects of ECB policy—such as recognized lender, average maturity, all-in-cost, prepayment, refinancing, and reporting arrangements—remain unchanged as per existing guidelines.
Is prior RBI approval required for NMIZ developers to avail ECB under this circular?
Yes, the circular specifies that ECB for NMIZ infrastructure facilities is allowed under the 'approval route,' meaning developers must obtain prior RBI approval before borrowing.