Payment of Guarantee Fee - overseas

[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. 4. Is Guarantee fee payment to Foreing companies, is prohibited under FEMA    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

AI Summary

Korean Subsidiary Seeks Guidance on ECB Guarantees, Cost Inclusions, and FEMA Regulations for Foreign Guarantee Fees A subsidiary of a Korean company is seeking guidance on several issues related to External Commercial Borrowings (ECB) under the Automatic Route. They inquire if their Korean parent company can provide a guarantee for an ECB from Exim Bank Korea and if the guarantee fee can be included in the 'All in Cost.' They also ask about the permissible use of remaining ECB funds after capital expenditures and whether paying a guarantee fee to foreign companies is prohibited under FEMA. The only response suggests consulting an Authorized Dealer or the Reserve Bank of India for answers.