Payment of Guarantee Fee for ECB Proceedings

[Pradeep Kaushik]

Dear All,

 

We are 100% Subsidery of a Korean Company.

 

We are proceeding our ECB activities under Automatic Route.

 

In this regards, please let us know:

 

1. Can our parent Company in Korea, make Guarantee for us to avail the ECB from Exim Bank Korea.

2. Can we pay the Gurantee fee to our parent Company, will be a part of 'All in Cost'.

3. If any balance remains in our ECB funds after making all our capex, what will be the use for the Balance Funds in ECB.

 

Please provide us the relevant clause in FEMA/ECB Master Circular in this regard.

 

Your early reply will be highly obliged.

 

Best Regards

Pradeep kaushik

[YAGAY andSUN]

Please check the Master Circular 12/2012-13 dated 02-07-2012 in this regard.

[Pradeep Kaushik]

Pradeep Ji,

 I have checked the the Master Circular 12/2012-13 dated 02-07-2012 , but could not get proper solution for my queries.

Can you Explain, please.

Best Regards.

[YAGAY andSUN]

I will be able to revert by coming Monday on your queries.

AI Summary

Parent company guarantee for external commercial borrowings: whether guarantee fee is part of all-in-cost and residual funds use. Whether a foreign parent may furnish a guarantee for a wholly-owned Indian subsidiary's External Commercial Borrowings under the Automatic Route; whether payment of a guarantee fee to the parent forms part of the all-in-cost of the ECB; and what uses are permitted for any balance remaining in ECB proceeds after capital expenditure - the query cites Master Circular 12/2012-13 dated 02-07-2012 but records that that circular did not resolve these specific questions.