What is the difference between ECB and FDI? Which is better?

Hi ,
According to me, there are several forms of debt instruments through which indian companies may source debt funding. These are commonly termed as external commercial borrowings (ecbs), Foreign currency convertible bonds (fccbs), foreign currency exchangeable bonds (fcebs), preference shares and debentures which do not fall under fdi guidelines (see discussion above), and trade credits (tcs).

Hi All,

ECB route is allowed only to “eligible borrowers”, from “recognized lenders”. The term “eligible borrowers” includes most corporates, but excludes banks, financial institutions and NBFCs. Infrastructure finance companies are permitted to raise ECBs. SEZ units are also allowed to raise ECBs.

Hi Guys,

Recognised lenders means (i)internationalbanks, (ii) international capital markets, (iii)multilateral financialinstitutions (such as IFC, ADB, CDC,etc.) / regional financial institutions and Government owneddevelopment financial institutions, (iv) export credit agencies,(v) suppliers of equipments, (vi) foreign collaborators and (vii)foreign equity holders. In order for a foreign equity holder to be a lender, there are minimum equity holding requirements too. The essence of the so-called “recognized lender” criteria is that not one can lend money under the terms of ECB. For example, individuals, finance companies, NGOs, etc cannot be lenders under ECBs.