Overseas borrowed funds can be parked with banks in India: RBI

MUMBAI: Easing norms for parking external commercial borrowings (ECB), the Reserve Bank today said such loans can be kept as fixed deposits for a period of six months for use at a later stage.

As per the extant norms, the money raised from abroad meant for rupee expenditure in India had to be brought immediately for credit to the rupee accounts of such borrowers.

"With a view to providing greater flexibility to the ECB borrowers in structuring draw down of ECB proceeds and utilisation of the same for permitted end uses, it has been decided to permit banks to allow eligible ECB borrowers to park ECB proceeds in banks in India for a maximum period of six months pending utilisation for permitted end uses," RBI said in a notification.

However, the facility will be applicable with the conditions that such term deposits should be exclusively in the name of the borrower, it can be liquidated as and when required and no charge in any form should be created on these deposits.

RBI said that the amended ECB policy will come into force with immediate effect.

The borrowers are allowed to use such proceeds for local sourcing of capital goods, on-lending to Self-Help Groups or for micro credit and payment for spectrum allocation.

India's external commercial borrowings increased by 44 per cent to USD 2.78 billion on October 2014, as per the RBI data.