Skip to main content

ECB vs FCCB


This is in response to the queries I received on whether ECB or FCCB is more convenient/liberal/less regulated.

For guidelines on each of them, please refer to the links attached in the respective articles.

FCCB

http://www.icai.org/icairoot/publications/complimentary/cajournal_nov05/703-708.pdf.

ECB

http://www.icai.org/icairoot/publications/complimentary/cajournal_may04/p1216-19.pdf

As regards which is more convenient, it always depends on the company raising funds.

Historically, companies prefer ECBs over FCCBs. The RBI data for the month of December 2007 showed only 7 of 44 companies raising funds through FCCBs automatic route and all 7 companies preferring the ECB over FCCB through approval route.

http://rbidocs.rbi.org.in/rdocs/ECB/pdfs/83662.pdf

Government has said that it is contemplating relaxing norms governing external commercial borrowings (ECBs) to enable Indian corporates access higher foreign capital at low cost. Besides, a review is underway to remove restrictions on foreign currency convertible bonds (FCCBs). The Govt is planning (though since quite a long time now) to amend FEMA and make the necessary changes in the guidelines so as to enable the Indian corporates raise substantial borrowings from overseas.

However, it has been made clear that the government would not allow unrestricted interest rate regime in ECBs in view of East Asian meltdown, caused by high interest rates and short duration of such borrowings in late ‘90s as Cost of borrowing is a concern for the Govt.

I hope at least this answers our initial questions. Please read through the links above while I prepare to answer more elaborately with updated information.

after all its all about ~ improving perfection ~

Labels:

Comments

Post a Comment

Popular posts from this blog

CA Info - industrial training

Hi Friends, Here is the list of approved insitutions eligible for imparting Industrial training Approved Organisations - Eastern Region SIEMENS LIMITED 43 SHANTI PALLY E.M.BY PASS CALCUTTA 700042 CITI BANK N.A. TATA CENTRE 41,CHOWRINGHEE ROAD CALCUTTA 700071 RECKITT & COLMAN OF INDIA LTD 41,CHOWRINGHEE ROAD CALCUTTA 700071 BRITANIA INDUSTRIES LTD . 14, TARATALA ROAD CALCUTTA 700088 ICI INDIA LTD 34, CHOWRINGHEE ROAD CALCUTTA 700071 GRASIM INDUSTRIES LTD. INDUSTRY HOUSE 14TH FLOOR, 10, CAMAC STREET KOLKATA 700017 AMERICAN EXPRESS BANK 21, OLD COURT HOUSE STREET CALCUTTA 700001 BALMER LAWRIE CO. LTD 21, NETAJI SUBHAS ROAD CALCUTTA 700001 INDIAN OIL CORPORATION LIMITED 2,GARIAHAT ROAD(S) DHAKURIA CALCUTTA 700068 SRF LIMITED EXPRESS BUILDING 1ST FLOOR BAHADUR SHAH ZAFAR MARG NEW DELHI 110002 INDIAN RAYON AND INDUSTRIES LTD RISHRA HOOGHLY 712249 PEPSI-COLA INDIA MARKETING COMPANY SREE MANJURI BLDG. SUITE NO.6 , 1ST FLOOR 8/1, MIDDLETON ROW CALCUTT...
116 comments
Read more

Understanding Financial Markets

Understanding Financial Markets What are the various types of financial markets? The financial markets can broadly be divided into money and capital market. Money Market : Money market is a market for debt securities that pay off in the short term usually less than one year, for example the market for 90-days treasury bills. This market encompasses the trading and issuance of short term non equity debt instruments including treasury bills, commercial papers, bankers acceptance, certificates of deposits, etc. Capital Market : Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized markets like stock exchanges. Capital market can be further divided into primary and secondary markets. What is meant by the Secondary Market? Secondary Market refers to a market where securities are traded after being initia...
1 comment
Read more

EVA revisited

Economic value Added INTRODUCTION Economic Value Added™ is the financial performance measure that comes closer than any other to capturing the true economic profit of an enterprise. EVA also is the performance measure most directly linked to the creation of shareholder wealth over time. EVA = Net operating Profit After tax – (Capital Employed x Cost of Capital) Net Operating Profit After Tax (NOPAT): A company's potential cash earnings if its capitalization were unleveraged (that is, if it had no debt). NOPAT is frequently used in economic value added (EVA) calculations. Calculated as: NOPAT = Operating Income x (1 - Tax Rate) Put most simply, EVA is net operating profit minus an appropriate charge for the opportunity cost of all capital invested in an enterprise. As such, EVA is an estimate of true "economic" profit, or the amount by which earnings exceed or fall short of the required minimum rate of return that shareholders and lenders could get by investing in other s...
Post a Comment
Read more