RBI/2011-12/390
A.P. (DIR Series) Circular No. 75
February 07, 2012
To
All Authorised Dealer Category- I Banks
Madam / Sir,
External Commercial Borrowings – Simplification of procedure
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
Regulations, 2000, notified vide Notification No. FEMA 3/2000-RB dated May 3,
2000,
A.P. (DIR Series) Circular No. 5 dated August 1, 2005 relating to the
External Commercial Borrowings (ECB), as amended from time to time and
A. P.
(DIR Series) Circular No.33 dated February 09, 2010.
- As per the extant ECB procedures, requests for reduction in the amount of
ECB, changes in the drawdown schedule where the original average maturity period
is not maintained and reduction in the all-in-cost of the ECB after obtaining
the Loan Registration Number (LRN) is required to be referred by the AD
Category-I bank to the Foreign Exchange Department, Central Office, Reserve Bank
of India for necessary approval.
- As a measure of simplification of the existing procedures, it has been
decided to delegate powers to the designated AD category-I banks to approve the
following requests from the ECB borrowers, subject to specified conditions:
a) Reduction in amount of ECB
The designated AD Category-I bank may approve requests from ECB borrowers for
reduction in loan amount in respect of ECBs availed under the automatic route,
subject to ensuring the following conditions:-
- the consent of the lender for reduction in loan amount has been obtained;
- the average maturity period of the ECB is maintained;
- the monthly ECB-2 returns in respect of the LRN have been submitted to the
Department of Statistics and Information Management (DSIM); and
- there is no change in the other terms and conditions of the ECB.
b) Changes/modifications in the drawdown schedule when original average maturity
period is not maintained
As per the extant procedures, Designated AD Category – I banks have been
delegated powers to approve changes / modifications in the drawdown / repayment
schedule of the ECBs already availed, both under the approval and the automatic
routes, subject to the condition that the average maturity period, as declared
while obtaining the LRN, is maintained.
It has now been decided that the designated AD Category-I bank may approve
requests from ECB borrowers for changes/modifications in the drawdown schedule
resulting in the original average maturity period undergoing change in respect
of ECBs availed both under the automatic and approval routes, subject to
ensuring the following conditions:-
- there are no changes/modifications in the repayment schedule of the ECB;
- the average maturity period of the ECB is reduced as against the original
average maturity period stated in the Form 83 at the time of obtaining the LRN;
- such reduced average maturity period complies with the stipulated minimum
average maturity period as per the extant ECB guidelines;
- the change in all-in-cost is only due to the change in the average maturity
period and the ECB complies with the extant guidelines; and
- the monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.
Any elongation / rollover in the repayment, on expiry of the original maturity,
of the ECB, would however, continue to require the prior approval of the Reserve
Bank.
c) Reduction in the all-in-cost of ECB
The designated AD Category-I bank may approve requests from ECB borrowers for
reduction in all-in-cost, in respect of ECBs availed both under the automatic
and approval routes, subject to ensuring the following conditions:-
- the consent of the lender has been obtained and there are no other changes in
the terms and conditions of the ECB; and
- the monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.
- The designated AD Category-I bank should ensure that the ECBs continue to
comply with the extant guidelines while exercising their delegated powers and
changes are promptly reported to the Department of Statistics and Information
Management (DSIM), Reserve Bank of India in Form 83.
- The above modifications to the ECB guidelines will come into force with
immediate effect. All other aspects of the ECB policy, such as, USD 750 million
limit per company per financial year under the automatic route, eligible
borrower, recognized lender, end-use, all-in-cost ceiling, average maturity
period, prepayment, refinancing of existing ECB and reporting arrangements shall
remain unchanged.
- AD Category –I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
7. 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