| The list may include charitable trusts, partnership or proprietary firms, non-banking finance institutions and no-profit-no-loss companies registered under the Section 25 of the company laws and engaged in microfinancing. |
| Lack of clarity in the definition of an NGO has led to banks rejecting applications of NGOs taking to the ECB route. Banks want the RBI to clearly notify those entities which are eligible to borrow through the ECB route. |
| In the annual credit policy statement last April, the RBI had outlined the guidelines for enabling NGOs to draw finance through ECBs. This followed the budget announcement of the finance minister. |
| As per the guidelines, the eligible NGO should have a satisfactory borrowing relationship for at least three years with a scheduled commercial bank authorised to deal in foreign exchange. |
| The maximum amount of foreign currency a borrower can borrow is capped at $5 million during a financial year. |
| The borrower would also require a certificate of due diligence on 'fit and proper' status of the board/ committee of management of the borrowing entity from the designated authorised dealer (AD). |
| The designated bank must ensure that the ECB proceeds are utilised for lending to self-help groups or for microcredit or for bonafide microfinance activity, including capacity building. |
| ECB funds should be routed through a normal banking channel from following internationally recognised sources such as international banks, multilateral financial institutions and export credit agency. |
| Overseas organisations planning to extend ECBs would have to furnish a certificate of due diligence from an overseas bank which in turn is subject to regulation of host-country regulator and adheres to Financial Action Task Force (FATF) guidelines to the designated AD. |
| Further banks will also have to conduct the KYC norm due diligence of the customer before they decide to lend. |
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