External Commercial Borrowing (ECB) can be made only for permitted purposes as per FEMA guidelines. What is ECB ? Also mention the negative list for which ECB proceeds cannot be utilized.

Answer 4(a) External Commercial Borrowing (ECB) are commercial loans raised by eligible resident entities from recognised non- resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end uses, maximum ceiling etc. The parameters apply in totality and not on a standalone basis. The ECB Policy issued by RBI stipulate the negative list for which the ECB proceeds cannot be utilized and includes the following: Real estate activities Investment in capital market Equity investment Working capital purposes and General corporate purposes except in the following cases: ECB raised from foreign equity holder for working capital purposes, general corporate purposes or for repayment of Rupee loans for Minimum Average Maturity Period of 5 years ECB raised for working capital purposes or general corporate purposes and on-lending by NBFCs for working capital purposes or general corporate purposes for Minimum Average Maturity Period of 10 years Repayment of rupee loans except in the following cases: repayment of Rupee loans availed domestically for capital expenditure and on-lending by NBFCs for the same purpose repayment of Rupee loans availed domestically for purposes other than capital expenditure and on-lending by NBFCs for the same purpose On-lending to entities for the above activities in case of ECB raised by NBFCs as given in point (d) (e) and (f) above.