External Commercial borrowing (ECB) is a term used to refer tocommercial loans availed from non-resident lenders with aminimum average maturity of 3 years in the form of bank loans,buyers credit, suppliers credit, securitized instruments (e.g.floating rate notes and fixed rate bonds).A company is free to raise ECB from any internationallyrecognized source such as banks, export credit agencies,suppliers of equipment, foreign collaborators, foreign equity-holders, international capital markets etc. However, offers fromunrecognized sources are not entertained.ECB can be accessed under two routes -:
Automatic Route and
Approval Route.Under the Automatic Route, the approval of Reserve Bank of India (RBI) or the Governments approval are not required.However, in case of doubt regarding eligibility under theAutomatic Route, applicants may take recourse to the ApprovalRoute. The maximum amount of ECB that can be raised by aneligible borrower under the Automatic Route during one financialyear is USD 500 million. NGOs engaged in micro finance activitieshave been permitted to raise ECB up to USD 5 million during afinancial year for permitted end-use.