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FDI: Entry and ownership rule
On 19 December 2011, the Reserve Bank of India allowed microfinance institutions to borrow up to USD 10 million through external commercial borrowings (ECBs) under the automatic route. Also, non-governmental organisations engaged in microfinance can avail ECBs up to USD 10 million or equivalent per year under the automatic route. Prior to the change, these NGOs were only allowed to raise an annual total of USD 5 million.
Through ECBs, Indian companies and Public Sector Undertakings can access funds from abroad. According to the Reserve Bank of India, ECBs refer to commercial loans in the form of bank loans, securitised instruments, buyers' credit and suppliers' credit availed of from non-resident lenders with a minimum average maturity of 3 years.
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