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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Institutions

Which of the following best describes the reporting requirement for an Indian borrower after drawing an ECB under the automatic route?

The borrower must file Form ECB through its authorised dealer bank to obtain a Loan Registration Number from the RBI before drawdown, and thereafter submit monthly ECB 2 returns. Reporting is a continuing obligation, not a one-time or lender-only requirement.

  1. ANo reporting is needed once the lender is a foreign bank
  2. BThe borrower must obtain a Loan Registration Number from the RBI through the authorised dealer bank by filing Form ECB before drawdown, and then file monthly ECB 2 returnsCorrect
  3. COnly the lender needs to report to its home regulator
  4. DThe borrower must report only at the time of final repayment

Explanation

Borrowers must report the ECB through the AD Category I bank in Form ECB to obtain a Loan Registration Number before drawdown. After drawdown, monthly ECB 2 returns are filed through the AD bank. Options A, C and D contradict this continuing reporting obligation.

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