Security for External Commercial Borrowings - Liberalisation

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..... rseas lender / supplier for securing ECB is left to the borrower. However, creation of charge over immoveable assets and financial securities, such as shares, in favour of the overseas lender is subject to Regulation 8 of Notification No. FEMA 21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000 dated May 3, 2000 , respectively, as amended from time to time. Accordingly, proposals for creation of charge on immovable assets, financial securities and issue of corporate or personal guarantees, on behalf of the borrower in favour of the overseas lender, to secure the ECB under automatic / approval route, are considered by the Reserve Bank. 3. As a measure of rationalisation of the existing procedures, it has .....

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..... B borrower. (ii) The period of such charge on immovable assets has to be co-terminus with the maturity of the underlying ECB. (iii) Such 'no objection' should not be construed as a permission to acquire immovable asset (property) in India, by the overseas lender / security trustee. (iv) In the event of enforcement / invocation of the charge, the immovable asset (property) will have to be sold only to a person resident in India and the sale proceeds shall be repatriated to liquidate the outstanding ECB. (b) Creation of Charge over Financial Securities AD Category - I banks may convey their 'no objection' under FEMA, 1999 to the resident ECB borrower for pledge of shares of the borrowing company held by promoters as well as i .....

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..... ws / regulations, the applicant should take the approval of the authority concerned before undertaking the transaction. Further, the 'no objection' should not be construed as regularizing or validating any irregularities, contravention or other lapses, if any, under the provisions of FEMA or any other laws or regulations. 8. These amendments to the ECB guidelines shall come into force with immediate effect, subject to review from time to time. 9. Necessary amendments to the Notification No. FEMA 3/2000-RB dated May 3, 2000 , Notification No. FEMA 8/2000-RB dated May 3, 2000 , Notification No. FEMA 20/2000-RB dated May 3, 2000 and Notification No. FEMA 21/2000-RB dated May 3, 2000 are being issued separately. 10. AD Category - I .....

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