RESERVE BANK OF INDIA
Foreign Exchange Department
Central Office
Mumbai - 400 001
A. P. (DIR Series) Circular No.119
May 7, 2012
To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy - Utilization of ECB proceeds for
Rupee expenditure
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
A.P. (DIR Series) Circular No. 5 dated August 1, 2005 and
A.P. (DIR Series)
Circular No. 52 dated November 23, 2011 relating to External Commercial
Borrowings.
- As per the extant guidelines, ECB proceeds can be utilized for permissible
foreign currency expenditure and Rupee expenditure. On a review, it has been
decided that at the time of availing Loan Registration Number (LRN) from the
Reserve Bank, borrowers should provide bifurcation of the utilization of the ECB
proceeds towards foreign currency and Rupee expenditure in Form-83.
- The primary responsibility to ensure that the ECB proceeds meant for Rupee
expenditure in India are repatriated to India for credit to their Rupee accounts
with AD Category- I banks in India as per A.P. (DIR Series) Circular No. 52
dated November 23, 2011 is that of the borrower concerned and any contravention
of the ECB guidelines will be viewed seriously and will invite penal action
under the Foreign Exchange Management Act (FEMA), 1999. The designated AD bank
is also required to ensure that the ECB proceeds meant for Rupee expenditure are
repatriated to India immediately after drawdown.
- The modifications to the ECB policy will come into force with immediate
effect and subject to review. All other aspects of the ECB policy shall remain
unchanged.
- AD Category - I banks may bring the contents of this circular to the notice
of their constituents and customers.
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rashmi Fauzdar) Chief General Manager
RBI/2011-12/539