The Reserve Bank of India (“RBI”) had, pursuant to the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, dated March 26, 2019 (“ECB Master Direction”), allowed borrowers of external commercial borrowings (“ECB”) to park the ECB proceeds in term deposits with AD Category-I banks in India for a maximum period of 12 (twelve) months cumulatively.
In view of the requests from stakeholders and with a view to providing relief to the ECB borrowers affected by the Covid-19 pandemic, RBI has vide its circular dated April 7, 2021 (“Circular”) relaxed the above stipulation as a one-time measure. Accordingly, unutilised ECB proceeds drawn down on or before March 1, 2020 can now be parked in term deposits with AD Category-I banks in India prospectively for an additional period up to March 1, 2022.
Please find a copy of the Circular here and a copy of the ECB Master Direction here.
This update has been contributed by Aastha (Partner) and Swaraj Narula (Senior Associate).
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