The Reserve Bank of India (RBI) today announced that pre-payment of external commercial borrowings (ECB) will be put on the automatic route. However, the RBI said the scheme is only on an experimental basis, and will be in effect till March 31, 2003.
Under the automatic route, corporates will be allowed to prepay their ECBs provided the outflow is fully matched by the inflow of foreign exchange in form of foreign investment in the applicant company.
Besides, the automatic route also covers those corporates which are prepaying ECBs out of the balance held in its export earner