Master Circular on ECB and Trade Credits (2012-13)

What changed

This master circular consolidates all existing instructions on External Commercial Borrowings (ECB) and trade credits into a single document, replacing earlier circulars. It includes updated provisions such as ECB for low-cost affordable housing and repayment of rupee loans for companies with forex earnings. The circular is valid until July 1, 2013, after which it will be replaced by an updated version.

What it means for you

Banks and lenders now have a single reference for ECB and trade credit rules, simplifying compliance and reducing confusion from multiple circulars. The consolidation ensures uniform application of guidelines, including automatic and approval routes, end-use restrictions, and reporting requirements. Lenders must ensure borrowers adhere to the updated all-in-cost ceilings and maturity norms.

What banks were required to do at the time

• Review the consolidated ECB guidelines to ensure all existing and new borrowings comply with the updated rules.
• Verify borrower eligibility, end-use restrictions, and all-in-cost ceilings before processing ECB applications.
• Update internal procedures to align with the reporting arrangements and delegation of powers to AD banks.
• Monitor the validity of this circular and prepare for the updated version effective July 1, 2013.

Who it affects

All Category-I Authorised Dealer banks, Indian companies availing ECB or trade credits, Non-resident lenders providing ECB or trade credits