RBI has vide its circular dated 21st November, 2014 clarified that ECB proceeds can be parked for a limited period of 6 months in bank term deposits with AD Category I banks before being utilised for the purpose for which they were brought in as a Loan. This will be subject to complying with some conditions which are as below:
- The applicable guidelines on eligible borrower, recognised lender, average maturity period, all-in-cost, permitted end uses, etc. should be complied with.
- No charge in any form should be created on such term deposits i.e. to say that the term deposits should be kept unencumbered during their currency.
- Such term deposits should be exclusively in the name of the borrower.
- Such term deposits can be liquidated as and when required;
The circular is available at this link viz. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9346&Mode=0