RBI/2013-14/377
A.P. (DIR Series) Circular No. 77
November 22, 2013
To
All Category - I Authorised Dealer Banks
Madam / Sir
Overseas Foreign Currency Borrowings by
Authorised Dealer Banks
Attention of AD category I banks is invited to
AP (DIR Series) circulars no.
40 dated September 10, 2013 read with
AP (DIR Series) Circular no. 61 dated
October 10, 2013 in terms of which they were permitted to borrow from
international/multilateral financial institutions up to 100 percent of their
Tier-I capital subject to the conditions mentioned therein and also swap the
borrowed amount with the Reserve Bank at a concessional rate as mentioned
therein. As per the said circulars both the permissions to borrow from the
international/multilateral financial institutions as well as to swap it with
Reserve Bank were valid till November 30, 2013.
- It has been brought to the Bank’s notice that some banks may be in the
process of negotiation of loans from international/multilateral financial
institutions and may not be in a position to draw the loan and deliver the same
to RBI as a part of the concessional swap within November 30, 2013. In this
context, it has been decided that if any bank is being sanctioned any loan from
any international/multilateral financial institutions and is receiving a firm
commitment in this regard on or before November 30, 2013, it will be allowed to
enter into a forward-forward swap under the first leg of which the bank will
sell forward the contracted amount of foreign currency corresponding to the loan
amount for delivery up to December 31, 2013. However, if the bank is not in a
position to deliver the contracted amount of foreign currency on the contracted
date, it would have to pay the difference between concessional swap rate
contracted and the market swap rate plus one hundred basis points. The other
terms and conditions for the swap will remain unchanged as notified earlier.
- It is reiterated that the above relaxation is available only for the
contracts entered into up to November 30, 2013 and not thereafter.
- The direction contained in this circular has been issued under sections 10(4)
and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is
without prejudice to permissions / approvals, if any, required under any other
law.
Yours faithfully
(C.D. Srinivasan)
Chief General Manager