Cardiff Services

ECB Compliance

Overview – External Commercial Borrowing (ECB) Compliance

External Commercial Borrowing (ECB) refers to the funds borrowed by Indian companies from foreign lenders in the form of loans, bonds, or other debt instruments. ECBs are a significant source of foreign capital and help companies meet their long-term financing needs, especially for infrastructure, capital expenditure, and expansion projects.

 

However, ECBs are regulated by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), and companies must comply with prescribed guidelines related to borrowing limits, end-use restrictions, maturity periods, and reporting requirements.

 

At Cardiff Services, we provide comprehensive assistance in ensuring full ECB Compliance, covering due diligence, documentation, approvals, RBI filings, and continuous monitoring to help companies avoid penalties and legal complications.

Features – ECB Compliance

  • Regulated by the Reserve Bank of India under FEMA guidelines

  • Multiple routes available: Automatic, Approval, and Hybrid

  • Sector-specific borrowing limits and end-use restrictions

  • Minimum maturity period requirements based on loan amount and sector

  • ECB proceeds allowed for capital expenditure, refinancing, and specific working capital needs

  • Mandatory reporting and filings with RBI via ECB-2 return and others

  • Interest rates and charges governed by RBI rules

  • Special conditions for borrowing from related foreign entities

  • Compliance ensures avoidance of penalties and legal issues

  • Helps companies raise foreign currency funds cost-effectively

Documents Required – ECB Compliance

  • Board Resolution approving the ECB transaction

  • Loan Agreement or ECB facility agreement with the foreign lender

  • End-use certificate or project report detailing the purpose of borrowing

  • RBI approval letter (if ECB is through Approval Route)

  • Declaration or undertaking for compliance with FEMA and ECB guidelines

  • Form ECB-2 (Return of Foreign Currency Borrowing) to be filed with RBI

  • Auditor’s certificate confirming end-use of ECB proceeds (if applicable)

  • Copy of the company’s Memorandum and Articles of Association

  • Financial statements (audited) for due diligence

  • Details of foreign lender including KYC documents

  • Foreign Exchange Transaction form submitted to authorized dealer bank

  • Any additional documents as requested by RBI or authorized dealer bank

Procedure – ECB Compliance

  1. Determine Eligibility and Route

    • Identify the appropriate ECB route: Automatic, Approval, or Hybrid based on sector, amount, and lender type.

  2. Board Approval

    • Pass a Board Resolution approving the ECB proposal, terms, and conditions.

  3. Obtain Necessary Approvals

    • For Approval Route ECBs, apply to RBI with required documents and obtain approval.

    • Automatic Route ECBs do not require prior RBI approval.

  4. Enter into Loan Agreement

    • Finalize and sign the loan agreement with the foreign lender specifying ECB terms.

  5. Ensure Compliance with End-Use and Caps

    • Confirm that ECB funds will be used for permissible purposes within RBI-specified limits.

  6. Report ECB Transaction to Authorized Dealer Bank

    • Submit necessary forms and documents to the authorized dealer bank (AD Bank).

  7. File ECB-2 Return with RBI

    • File Form ECB-2 electronically with RBI within 30 days of receiving funds.

  8. Monitor Utilization and Compliance

    • Ensure ECB proceeds are used as per approved end-use.

    • Maintain records for audit and regulatory review.

  9. Submit Auditor’s Certificate (if applicable)

    • Submit an auditor’s certificate confirming end-use of funds when required.

  10. Regular Reporting

    • Comply with periodic reporting and disclosures as mandated by RBI and FEMA.

With Cardiff Services, ECB compliance is seamless, ensuring timely approvals, accurate filings, and adherence to all regulatory requirements.

Frequently Asked Questions

A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.

If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.

It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.

For a company name search in Cardiff, you may need:

  • Proposed company name

  • Business entity type (Ltd, LLP, Partnership, etc.)

  • Jurisdiction (Cardiff / UK)

  • Owner or shareholder details (if applicable)

  • Business description

A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.

Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms