Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations

Question 1

FCCBs, the issue related expenses should not exceed …. per cent of the issue size and in case of private placement, these expenses should not exceed … per cent of the issue size

Answer 1

4, 2

Question 1

All in Cost for ECB excludes

Answer 1

commitment fees and withholding tax payable in INR

Question 2

All in Cost for TC excludes

Answer 2

Withholding tax payable in INR

Question 3

Various components of all-in-cost have to be paid by the borrower without taking recourse to the drawdown of ………….

Answer 3

ECB/TC

Question 4

What is not included in Real Estate Activities?

Answer 4

construction/development of industrial parks/integrated townships/SEZ, purchase/long term leasing of industrial land as part of new project/modernisation of expansion of existing units and any activity under ‘infrastructure sector’ definition

Question 5

MAMP for ECB

Answer 5

3 years

Question 6

MAMP for ECB raised by manufacturing companies upto 50 Million USD per financial year?

Answer 6

1 year

Question 7

ECB raised from foreign equity holder and utilised for working capital purposes, general corporate purposes or repayment of Rupee loans

Answer 7

5 Years

Question 8

ECB raised for working capital purposes, general corporate purposes, repayment of Rupee loans availed domestically for purposes other than capital expenditure or on lending to NBFC for the said purposes

Answer 8

10 years

Question 9

ECB raised for repayment of Rupee loans availed domestically for capital expenditure or on lending to NBFC for the said purpose

Answer 9

7 years

Question 10

Other costs such as Prepayment charge/ Penal interest, if any, for default or breach of covenants – not to be more than ………. over and above the contracted rate of interest on the outstanding principal amount and will be outside the all-in-cost ceiling

Answer 10

2 percent

Question 11

Limit of ECB under automatic route

Answer 11

USD 750 Million

Question 12

ECB proceeds meant for Rupee expenditure should be repatriated immediately for credit to their Rupee accounts with AD Category I banks in India. ECB borrowers are also allowed to park ECB proceeds in term deposits with AD Category I banks in India for a maximum period of ………..

Answer 12

12 months

Question 13

Changes in terms and conditions of ECB by mutual agreement between the lender and borrower shall be reported to …………… and within …………days

Answer 13

DSIM, 7

Question 14

ECB facility for Oil Marketing Companies MAMP - ……………… and Limit - …………..

Answer 14

3 years, USD 10 Billion

Question 15

ECB facility for Startups MAMP - ……………… and Limit - …………..

Answer 15

3 years, USD 3 Million

Question 16

…………………. refer to the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the GOI

Answer 16

Trade Credits (TC)

Question 17

TC Amount under automatic route for import transaction for oil/gas refining & marketing, airline and shipping companies.

Answer 17

USD 150 Million

Question 18

TC Amount under automatic route for other imports

Answer 18

USD 50 Million

Question 19

Period of TC for import of capital goods, non-capital goods and for shipyards / shipbuilders for non capital goods.

Answer 19

capital goods - 3 year,
non-capital goods - 1 year or operating cycle whichever is less,
shipyards / shipbuilders for non capital goods - 3 year

Question 20

What is the requirement to be called as Foreign Equity Holder

Answer 20

minimum 25% direct equity holding in the borrowing entity or minimum indirect equity holding of 51% or group company with common overseas parent.

Question 21

Transactions on account of External Commercial Borrowings (ECB) and Trade Credits (TC) are governed by clause ………… of Foreign Exchange Management Act, 1999 (FEMA).

Answer 21

6 (2)

Question 22

ECB liability-Equity ratio

Answer 22

7:1, however it is not applicable if borrowings is less than USD 5 Million

Question 23

All-in-cost
ceiling per
annum for ECB FCY

Answer 23

Benchmark Rate + 550 bps for old ECB and Benchmark Rate + 500 bps for new ECB

Question 24

All-in-cost
ceiling per
annum for ECB INR

Answer 24

Benchmark Rate + 450 bps

Question 25

Trade Credits (TC) refer to the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for imports of capital/non-capital goods permissible under the ………………………………….

Answer 25

Foreign Trade Policy of the GOI

Question 26

All-in-cost
ceiling per
annum for TC FCY

Answer 26

Benchmark Rate + 350 bps for old TC and Benchmark Rate + 300 bps for new TC

Question 27

All-in-cost
ceiling per
annum for TC INR

Answer 27

Benchmark Rate + 250 bps