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External Commercial Borrowings (ECBs) � Prepayment
A. P. (DIR Series) Circular No. 22 dated 17th
September 2002
Attention of authorised dealers is invited to
A.P. (DIR Series) circular No.8 dated August 5, 2002 regarding introduction of
an "automatic route" for prepayment of ECBs.
2.
Under the automatic route prepayment of ECBs was permitted, without any
limit, out of foreign exchange inflow through either fresh equity or out of
balances held in Exchange Earners' Foreign Currency (EEFC) account. Prepayment
upto USD 50 million was also permitted in cases where the amount being prepaid
was upto 10% of the outstanding or the residual maturity of the loan was less
than one year.
3.
In order to permit the corporates to take advantage of low international
interest rates, the Reserve Bank has now decided that, in supercession of
earlier instructions, any borrower who has raised ECBs in accordance with the
prevalent Rules/ Regulations/ Guidelines may prepay, the outstanding ECB upto an
amount of USD 100 million without prior permission from the Reserve Bank. It is
clarified that this liberalised automatic route is available to all category of
borrowers irrespective of the residual maturity or percentage of the outstanding
loan, as long as the amount being prepaid does not exceed USD 100 million.
4.
Authorised dealers may, therefore, allow remittances not exceeding USD
100 million for prepayment of ECBs after obtaining a certificate from the
company secretary/ auditors of the borrower, indicating that the borrower -
(i)
has availed and utilised the loan in accordance with all relevant Acts,
RBI/Government Rules, Regulations and Guidelines, and
(ii)
has submitted all the ECB-2 Returns to the concerned regional office of
the Reserve Bank.
5.
The authorised dealers shall forward a report in form ECB-PAR (revised
format enclosed) within 7 days of the remittance, to the Chief General Manager,
Exchange Control Department, ECB Division, Central Office, Reserve Bank of
India, Fort, Mumbai � 400 001.
6.
It is clarified that the facility under the automatic route for
prepayment of ECBs as contained in this circular, will be available upto
March 31, 2003. A circular will be issued on or before that date in case the
scheme is extended for a further period.
7.
Applications for prepayment of amount exceeding USD 100 million would be
considered expeditiously for approval by the Reserve Bank. Borrowers desirous of
availing of the facility may make application to the Reserve Bank of India,
Central Office, Mumbai with full particulars, namely, terms of the prepayment,
the period over which the prepayment is to be made and also whether `in
principle' contract for prepayment has been negotiated with the lender. Further,
corporates desirous of obtaining `in principle' approval from the Bank before
negotiating the prepayment contract may also approach the Reserve Bank. The `in
principle' approvals issued by the Reserve Bank will be valid for 15 days.
8.
No prior permission or `in principle' approval of the Reserve Bank will
be required for prepayment of ECBs out of balances held in EEFC accounts or
foreign exchange inflow for fresh equity, even if the amount exceeds USD 100
million.
9.
Authorised Dealers may bring the contents of the circular to the notice
of their constituents concerned.
10.
The directions contained in this circular have been issued under Section
10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of
1999).
ECB
PAR
(Report
of Prepayment of ECB under the automatic route to be submitted within 7 days of
the date of remittance to the Chief General Manager, Exchange Control
Department, ECB Division, Central Office, Reserve Bank of India, Fort, Mumbai
400001)
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1.
Name of the Borrower
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2.
Name of Lender
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3.
Details of the loan
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a) Govt / RBI Loan Key No.
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b) Approval No. and Date
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c) RBI Registration No.
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d) Amount of Loan
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e) Maturity of Loan
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f) Details of prepayment, if
any, made earlier (Govt./ RBI approval No.
& date and amount & date of prepayment)
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4.
Details of the current remittance of prepayment
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a)
Prepayment category (please 4 whichever applicable).
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i) Out of inflow of matching foreign equity.
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ii) Out of balance held in EEFC account of borrower.
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iii) 10% of outstanding ECB one during currency of ECB.
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iv) Residual maturity up to one year.
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v) Others
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b)
Date of Remittance
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c)
Amount of remittance
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Certificate
by the Designated Authorised Dealer
We
have obtained a certificate from the company secretary/ auditor indicating that:
a)
the borrower is eligible for prepayment of outstanding of ECB; under the
category ______________
b)
the ECB has been availed of and utilised in accordance with all the
relevant Acts, RBI/ Govt. Rules, Regulations and guidelines; and
c)
the ECB2 statement/s due till date has/ have been submitted to
___________ office to Reserve Bank of India.
Place _____________
Date
_____________
Signature __________________
Name and designation __________________
Seal
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