Description
what are external commercial borrowings and what is the regulatory framework. It also analyzes the trend of ECBs with secot wise analysis (Auto, telecom, steel, IT, infrastructure)
TREND OF ECBS- LOW COST FUNDS FOR INDIAN COMPANIES
EXTERNAL COMMERCIAL BORROWINGS
? A source of funds for financing expansion of existing
capacity and for fresh investment out of territory
? External Commercial Borrowings (ECB) refer to
commercial loans availed from non-resident lenders
EXTERNAL COMMERCIAL BORROWINGS
It includes:
? Commercial bank loans
? Buyers’ credit ? Suppliers’ credit ? Securitized instruments such as floating rate notes, fixed
rate bonds etc. ? Credit from official export credit agencies ? Commercial borrowings from the private sector window of multilateral financial Institutions such as IFC, ADB etc. ? Investment by Foreign Institutional Investors (FIIs) in dedicated debt funds
REGULATORY FRAMEWORK
? ECBs availed of by residents are governed by clause
(d) of sub-section 3 of section 6 of the Foreign Exchange Management Act, 1999
? “Master Circular on External Commercial Borrowings
and Trade Credits” issued by RBI on 1st July, 2010 consolidates all existing instructions on the subject of “ECBs and Trade Credits”
POLICY
? Permitted by the Government as a source of finance
for Corporate to expand their existing capacity & for fresh investment ? An annual cap or ceiling on access to ECB, consistent with prudent debt management ? Greater priority for projects in the infrastructure, Power, oil, telecom, railways, Roads & Bridges, Ports, Industrial parks, urban Infrastructure & export sector.
ECB ROUTES
Ways of raising ECB
•Automatic route
•Approval route
ECB AS A LONG TERM FINANCING SOURCE IN INDIA
TOTAL ECB CASH FLOWS FOR LAST 3 YEARS
ANALYZING TREND OF ECB’S
The major purposes for which ECBs were taken in India are: ? Import of Capital ? Rupee Expenditure Loc.CG ? Project Financing ? Modernization ? Overseas acquisition ? Onward/sub lending ? FCCB Buy Back ? Leasing & hire purchase ? Refinancing of old loans
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
SECTOR WISE ANALYSIS
SECTOR WISE ANALYSIS - STEEL
SECTOR WISE ANALYSIS - AUTO
SECTOR WISE ANALYSIS - IT
SECTOR WISE ANALYSIS - INFRASTRUCTURE
SECTOR WISE ANALYSIS - TELECOM
CONCLUSION
? The ECBs route provides an Indian company with the foreign
currency funds that may not be available in India ? The cost of funds at times works out to be cheaper as compared to the cost of rupee funds and the availability of the funds from the International market is huge compared to the domestic market. ? The success of India’s debt management policy is reflected in a perceptible improvement in various external debt indicators ? As we can see in the previous slides, SMEs are increasingly opting for the ECB route to raise funds, a growing trend, given the current rising interest scenario
REFERENCES
? RBI/2009-10/ 27 ,Master Circular No. 07/2009-10
? Monthly data available on RBI website:
rbidocs.rbi.org.in/rdocs/ECB/docs/ ? http://www.assocham.org/arb/afp/2009/ECBs_study. pdf ? http://www.icai.org/resource_file/201announ1262_rsg. pdf
THANK YOU !
doc_983082743.pptx
what are external commercial borrowings and what is the regulatory framework. It also analyzes the trend of ECBs with secot wise analysis (Auto, telecom, steel, IT, infrastructure)
TREND OF ECBS- LOW COST FUNDS FOR INDIAN COMPANIES
EXTERNAL COMMERCIAL BORROWINGS
? A source of funds for financing expansion of existing
capacity and for fresh investment out of territory
? External Commercial Borrowings (ECB) refer to
commercial loans availed from non-resident lenders
EXTERNAL COMMERCIAL BORROWINGS
It includes:
? Commercial bank loans
? Buyers’ credit ? Suppliers’ credit ? Securitized instruments such as floating rate notes, fixed
rate bonds etc. ? Credit from official export credit agencies ? Commercial borrowings from the private sector window of multilateral financial Institutions such as IFC, ADB etc. ? Investment by Foreign Institutional Investors (FIIs) in dedicated debt funds
REGULATORY FRAMEWORK
? ECBs availed of by residents are governed by clause
(d) of sub-section 3 of section 6 of the Foreign Exchange Management Act, 1999
? “Master Circular on External Commercial Borrowings
and Trade Credits” issued by RBI on 1st July, 2010 consolidates all existing instructions on the subject of “ECBs and Trade Credits”
POLICY
? Permitted by the Government as a source of finance
for Corporate to expand their existing capacity & for fresh investment ? An annual cap or ceiling on access to ECB, consistent with prudent debt management ? Greater priority for projects in the infrastructure, Power, oil, telecom, railways, Roads & Bridges, Ports, Industrial parks, urban Infrastructure & export sector.
ECB ROUTES
Ways of raising ECB
•Automatic route
•Approval route
ECB AS A LONG TERM FINANCING SOURCE IN INDIA
TOTAL ECB CASH FLOWS FOR LAST 3 YEARS
ANALYZING TREND OF ECB’S
The major purposes for which ECBs were taken in India are: ? Import of Capital ? Rupee Expenditure Loc.CG ? Project Financing ? Modernization ? Overseas acquisition ? Onward/sub lending ? FCCB Buy Back ? Leasing & hire purchase ? Refinancing of old loans
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
ANALYZING TREND OF ECB’S
SECTOR WISE ANALYSIS
SECTOR WISE ANALYSIS - STEEL
SECTOR WISE ANALYSIS - AUTO
SECTOR WISE ANALYSIS - IT
SECTOR WISE ANALYSIS - INFRASTRUCTURE
SECTOR WISE ANALYSIS - TELECOM
CONCLUSION
? The ECBs route provides an Indian company with the foreign
currency funds that may not be available in India ? The cost of funds at times works out to be cheaper as compared to the cost of rupee funds and the availability of the funds from the International market is huge compared to the domestic market. ? The success of India’s debt management policy is reflected in a perceptible improvement in various external debt indicators ? As we can see in the previous slides, SMEs are increasingly opting for the ECB route to raise funds, a growing trend, given the current rising interest scenario
REFERENCES
? RBI/2009-10/ 27 ,Master Circular No. 07/2009-10
? Monthly data available on RBI website:
rbidocs.rbi.org.in/rdocs/ECB/docs/ ? http://www.assocham.org/arb/afp/2009/ECBs_study. pdf ? http://www.icai.org/resource_file/201announ1262_rsg. pdf
THANK YOU !
doc_983082743.pptx