Consider the following statements about External Commercial Borrowing:

  1. It is governed under the Foreign Exchange Management Act
  2. It is a part of capital account

  Which of the above statements is/are correct?

Answer: [C] Both 1 & 2

Both are correct statements
ECB is basically a loan availed by an Indian entity from a non-resident lender. Most of these loans are provided by foreign commercial banks and other institutions. It is a loan availed of from non-resident lenders with a minimum average maturity of 3 years. External Commercial Borrowings (ECBs) includes commercial bank loans, buyers' credit, suppliers' credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc.

This question is a part of GKToday's Integrated IAS General Studies Module