Does a company, incorporated in India, raising rupee denominated loan from a Non-resident Indian (NRI)/Person of Indian Origin (PIO) by way of Non-Convertible Debentures (NCDs) through a public offer get covered under th

No, NRI/PIO giving rupee denominated loan, to resident company by way of Non-Convertible Debentures (NCDs) through a public offer is not covered under the ECB framework. It is covered under Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000 issued vide Notification No. FEMA 4/2000-RB dated May 3, 2000 as amended from time to time. As per the provisions contained in these Regulations, a company incorporated in India is permitted to raise Rupee denominated loan from an NRI / PIO only by way of issuance of NCDs through a public offer and is subject to other provisions contained in these Regulations like redemption period for such NCDs should not be less than 3 years, the rate of interest on such NCDs issued does not exceed the prime lending rate of the State Bank of India as on the date on which the resolution approving the issue is passed in the borrowing company's General Body Meeting, plus 300 basis points etc.