Shrandhanjali Hotels (India) Ltd., a NSE Listed Company, wants to raise the fund of USD 800 Million for spreading its business in all over India. Arnave Sodi, Chairman of the Company, suggested for External Commercial Bo

Shrandhanjali Hotels India Limited is a listed entity. The amount proposed to be raised through ECB based on sectoral cap provided, is over the permissible limit. Hence the same needs prior approval of the Reserve Bank of India under the extant regulations. As the individual limits of ECB that can be raised by eligible entities under the automatic route per financial year is up to USD 750 million or equivalent for the companies in infrastructure sector, the proposed ECB is more than permissible limit under the automatic route, therefore, the prior approval of the RBI required and fund can only be raised under Approval Route. The following check points should be considered while raising the ECB: Check if the borrowings conform to the ECB Guidelines. Check the Eligibility of borrower Check the recognition of lender. Check the All in cost Ceiling. Check the permitted end use requirements. Check the individual limit of ECB. Check the Hedging Requirements. Check the requirement of the Creation of Charge. Check whether total outstanding stock of ECBs (including the proposed ECBs) from a foreign equity lender should not exceed seven times the equity holding, either directly or indirectly of the lender (in case of lending by a group company, equity holdings by the common parent would be reckoned). Check whether the parking of ECB funds is as per the norms. Check whether RBI permission is obtained for Pre-payment of ECB for amounts exceeding USD500 million, if necessary. Check the provisions regarding refinancing/rescheduling of ECB if any.