Whether conversion of 'External Commercial Borrowing' into equity is permissible? Comment.

Indian companies have been granted general permission for conversion of External Commercial Borrowings (ECB) (excluding those deemed as ECB) in convertible foreign currency into equity shares/fully compulsorily and mandatorily convertible preference shares, subject to the following conditions and reporting requirements: The activity of the company is covered under the Automatic Route for FDI or the company has obtained Government approval for foreign equity in the company; The foreign equity after conversion of ECB into equity is within the sectoral cap, if any; Pricing of shares is as per the issue price of shares; Compliance with the requirements prescribed under any other statute and regulation in force; and The conversion facility is available for ECBs availed under the Automatic or Government Route and is applicable to ECBs, due for payment or not, as well as secured/unsecured loans availed from non-resident collaborators.