Consider the following statements regarding External Commercial Borrowings (ECBs):
1. They can only be denominated in foreign currency and are legally barred from being denominated in Indian Rupees.
2. Indian infrastructure sector entities are strictly prohibited from raising ECBs under RBI regulations.
Which of the statements given above is/are correct?
Answer and explanation
Correct answer: C. Neither 1 nor 2
- Step 1: Statement 1 is incorrect: Under the Reserve Bank of India ECB framework, external commercial borrowings can be denominated in freely convertible foreign currencies or in Indian Rupees (INR ECBs).
- Step 2: Statement 2 is incorrect: Entities in infrastructure, manufacturing, and software development are eligible borrowers expressly allowed to access ECBs for capital investment.
Answer
Neither 1 nor 2.
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