By a circular dated 1 January 2015, the Reserve Bank of India has permitted Authorised Dealer Category-I banks to allow the creation of (i) charges on immovable and movable assets, (ii) charges over financial securities and (iii) issue of corporate or personal guarantees in favour of overseas lenders to secure External Commercial Borrowings (ECB) raised by borrowers, subject to the satisfaction of certain conditions.
The choice of security to be provided to the overseas lender for securing the ECB was previously left to the borrower, so the 1 January 2015 circular brings clarity by setting out the available options regarding charges which may be created and consolidating various provisions related to the creation of such charges.
Originally published in March 2015 Newsletter.
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