myz-vgb.ru A Business Encyclopedia

External Commercial Borrowings

Definition: The External Commercial Borrowings or ECBs is the financial instrument used to borrow money from the foreign sources of financing to invest in the commercial activities of the domestic country. Simply, borrowing money from the non-resident lenders and investing it in the commercial activities of India is called as external commercial borrowings.

The external commercial borrowings are considered as a source of finance to expand the existing capacity of the Indian corporates and finance new investment ventures, with an objective to have a sound economic growth.

The government of India seeks investment in the infrastructure and core sectors such as power, coal, railways, roads, telecom, etc. which are directly related to economic development of the country.

External commercial borrowings cannot be used for the investments in a stock market or any speculation business. And to keep a check on it, department of economic affairs, finance ministry, government of India and RBI monitor and regulates the policies of external commercial borrowings.

The ECBs is known as the money borrowed from the foreign sources or the non-resident lenders and include Commercial bank loans, Floating rate notes and fixed rate bonds (securitized instruments), Buyer’s and supplier’s credit, credit notes, mortgage-backed securities, etc.

Here, one thing should be made clear that such borrowing is a type of funding other than equity. This means, if the money is used to finance the core capital (equity shares, preference shares, convertible preference shares, convertible debentures, etc.) of any company, then it will be termed as a foreign direct investment and is not included under external commercial borrowings.

Leave a Reply

Your email address will not be published. Required fields are marked *

Shares

Related pages


marketer definitionspeculation economics definitionmodernist theorydefine multi-facetedaffluence definitiondefinition of leadership behaviorbank borrow money from rbi on which ratedefine isoquantskinner motivation theoryteleological theories focus ondisadvantages of long term financingmonopolistic competition wikipediamarket demand schedule definition economicsasset turnover rate formulamax weber hierarchythe marginal value of a commodity to a consumermargin lending definitionmarkup on salesscientific management taylortotal assets turnover ratio analysisstratified proportional samplinggeocentric staffinglaissez fair leadershipdeficit monetizationsebi employeesgeographic segmentation meaningtaylor theory of scientific managementretention urdu meaningcauses of channel conflictsrevitalise definitiondefine reorder quantitydefine budget deficittypes of sbulost travellers chequesstepping stones costppf termsale and leaseback arrangementcentral bank definition economicsherzberg motivation factorsretrenchment strategy pptcarrot principle summarystrategic defwhat is the definition of classical conditioningisoquant diagramlikert's leadership stylessensitivity analysis for npvdefinition of equipmentslaw of equi marginal utility in economicsdefine delphi methodproduction function in microeconomicswhat is franchiserpost office monthly income scheme bonus14 general principles of management given by fayol7cs of communication examplesschumpeter innovation theorychit fund meaningoligopoly market examples in indiawhat is autocratic leadershiptwo way asymmetrical communicationvan heusen originpavlov's theory of learningskinner conditioning theorydelphi technique examplesretailing definegreen shoe provisionauthorised capital meaningmeaning of guerrilla warfareformat of a cash budgetwhat is the meaning of revitalizegoods with elastic demandfrictional unemployment refers todefine interindividualdeterminants of the price elasticity of demandpoachers definitionelasticity of factor substitutionassumptions for pearson correlation7cs of business communicationgordon dividend growth modeldebenture definedefinition of psychoanalytic theorydefinition of entrepreneurial process