At present, the choice of security to be provided to the overseas lender or the supplier for securing ECB is left to the borrower.
     
The decision was taken "with a view to liberalizing, expanding the options of securities and consolidating various provisions related to creation of charge over securities for ECB at one place," the RBI said in a notification.
    
The relaxations are with immediate effect. "It has been decided that AD Category-I banks may allow creation of charge on immovable assets, movable assets, financial securities and issue of corporate and / or personal guarantees in favour of overseas lender / security trustee, to secure the ECB to be raised / raised by the borrower," it added.
     
However, the new rules are subject to certain conditions. The underlying ECB must be in compliance with extant ECB guidelines, there should be a security clause in the Loan Agreement requiring the ECB borrower to create charge, and a no objection certificate will have to be obtained from an existing domestic lender.
     
Additionally, AD Category-I bank may permit creation of charge on immovable assets, movable assets, financial securities and issue of corporate and / or personal guarantees, the RBI said.

Latest News  from Business News Desk