Define External Commercial Borrowing (ECB)
External Commercial Borrowing (ECB) is an instrument used to facilitate Domestic companies to raise money from outside. The instrument of ECBs used in India to facilitate the Indian companies to raise money outside India.
ECB is permitted for two reasons in general:
- For new investment by a firm
- For the expansion of existing capacity.
External Commercial Borrowings (ECBs) can take different forms like
- Buyers credit (Nirav Modi scam)
- Suppliers credit
- Bank loans Etc.
In general, we divide ECBs based on two factors:
- Minimum Average maturity (MAM)