75th Founding Day Lecture Meeting on “India@2030” Know More

June 2009

External Commercial Borrowings (ECB) Policy —Liberalisation — Issue of guarantee for operating lease

By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Tarun Ghia, Nimesh Dedhia, Vijay Kewalramani
Chartered Accountants
Reading Time 1 mins
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Part C : RBI/FEMA


Given below are the highlights of certain RBI Circulars

  1. A. P. (DIR Series) Circular No. 62, dated April 20, 2009

External Commercial Borrowings (ECB)
Policy —Liberalisation — Issue of guarantee for operating lease

Presently, AD Category – I banks are permitted to convey
‘no objection’ under FEMA for creation of charge on immoveable assets,
financial securities and issue of corporate pr personal guarantees in favour
of overseas lender/security trustee, to secure ECB to be raised by the
borrower, subject to compliance with prescribed conditions.

This Circular, in addition to the above, allows AD
Category – I banks to convey ‘no objection’ under FEMA for issue of corporate
guarantee in favour of the overseas lessor, for operating lease in respect of
import of aircraft/aircraft engine/helicopter, subject to compliance with
prescribed conditions.

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