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

June 2012

A.P. (DIR Series) Circular No. 113, dated 24-4-2012 — External Commercial Borrowings (ECB) for Civil Aviation Sector.

By Gaurang Gandhi, Chartered Accountant
Reading Time 2 mins
fiogf49gjkf0d

Presently, ECB cannot be raised to finance working capital requirements. This Circular, however, permits companies in the civil aviation sector to avail ECB for working capital requirements under the Approval Route, subject to the following:

(i) Airline companies must be registered under the Companies Act, 1956 and possess scheduled operator permit licence from DGCA for passenger transportation.

 (ii) ECB will be allowed to the airline companies based on the cash flow, foreign exchange earnings and its capability to service the debt.

(iii) The ECB for working capital must be raised within 12 months from the date of issue of this Circular.

(iv) ECB must be raised with a minimum average maturity period of three years.

(v) The overall ECB ceiling for the entire civil aviation sector would be one billion and the maximum permissible ECB that can be availed by an individual airline company will be INR18,437 million. This limit can be utilised for working capital as well as refinancing of the outstanding working capital Rupee loan(s) availed of from the domestic banking system.

(vi) Foreign exchange required for repayment of ECB cannot be raised from Indian markets and the liability can be extinguished only out of the foreign exchange earnings of the borrowing company.

(vii) No roll-over of ECB availed for working capital/refinancing of working capital will be allowed.

Download PDF

You May Also Like

A.P. (DIR Series) Circular No. 112, dated 20-4-2012 — External Commercial Borrowings (ECB) Policy — Refinancing/Rescheduling of ECB.

Rescinding of certain Notifications — Notification No. 34/2012-ST, dated 20-6-2012.