Corporates can raise funds through external commercial borrowings through the automatic route, notwithstanding the pending investigations by law enforcement agencies against them, as the Reserve Bank on Tuesday relaxed the ECB guidelines.
"It has been decided to permit all entities to avail of ECBs under the automatic route as per the current norms, notwithstanding the pending investigations or adjudications or appeals by the law enforcing agencies, without prejudice to the outcome of such investigations or adjudications or appeals," RBI said in a notification.
The modifications to the ECB guidelines will come into force with immediate effect, it added.
As per the extant guidelines, corporates that are under investigation by any law enforcing agencies like the Directorate of Enforcement, are not allowed to access ECB under the Automatic route. Any request by such corporates for ECB is examined by RBI under the approval route.
The notification said, however, that in the case of all applications where the borrowing entity has indicated about the pending investigations or adjudications or appeals, the Authorised Dealers while approving the proposal shall intimate the concerned law enforcement agencies by endorsing the copy of the approval letter.
The same procedure will be followed by the Reserve Bank of India also while approving such proposals, as per the notification.
RBI said that all other aspects of the ECB policy, under the Automatic route such as amount of ECB, eligible borrower, recognised lender, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.
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