RBI/2011-12/340
A. P. (DIR Series) Circular No.64
January 05, 2012
To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB)
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, amended from time to time, issued vide Notification No.FEMA.120/RB-2004
dated July 7, 2004, as amended from time to time, A.P. (DIR Series) Circular No.
5 dated August 1, 2005, as amended from time to time, A.P. (DIR Series) Circular
No.17 dated December 4, 2006, A.P. (DIR Series) Circular No. 1 dated July 04,
2011 and A.P. (DIR Series) Circular No. 27 dated September 23, 2011 relating to
the External Commercial Borrowings (ECB).
- The ECB limit for eligible borrowers under the automatic route was enhanced
to USD 750 million or equivalent per financial year per borrower for permissible
end-uses under the automatic route vide A.P. (DIR Series) Circular No. 27 dated
September 23, 2011. Consequent to the enhancement in limits, the revised average
maturity guidelines under the automatic route are as follows:-
a) ECB up to USD 20 million or equivalent in a financial year with minimum
average maturity of three years; and
b) ECB above USD 20 million and up to USD 750 million or equivalent with minimum
average maturity of five years.
- Accordingly, the requirement of average maturity period, prepayment and call
/ put options specified vide A.P. (DIR Series) Circular No.17 dated December 4,
2006 (for additional amount of USD 250 million) has been dispensed with.
- It is also clarified that the eligible borrowers under the automatic route
can raise Foreign Currency Convertible Bonds (FCCBs) up to USD 750 million or
equivalent per financial year for permissible end-uses. Similarly, corporates in
specified service sectors, viz. hotel, hospital and software, can raise FCCBs up
to USD 200 million or equivalent for permissible end-uses during a financial
year subject to the condition that the proceeds of the ECB should not be used
for acquisition of land.
- Vide para 2(viii) of A.P. (DIR Series) Circular No.01 dated July 04, 2011,
ECB / FCCB availed of for the purpose of refinancing the existing outstanding
FCCB were to be reckoned as part of the limit of USD 500 million available under
the automatic route as per the extant norms. Consequent to the enhancement in
the limits under the automatic route, it is clarified that the ECB / FCCB
availed of for the purpose of refinancing the existing outstanding FCCB will be
reckoned as part of the limit of USD 750 million available under the automatic
route as per the extant norms.
- All other aspects of the ECB policy, such as eligible borrower, recognised
lender, all-in-cost, end-use, prepayment, refinancing of existing ECB and
reporting arrangements shall remain unchanged.
- Necessary amendments to the Foreign Exchange Management (Borrowing or Lending
in Foreign Exchange) Regulations, 2000 dated May 3, 2000 and Foreign Exchange
Management (Transfer or Issue of any Foreign Security)
(Amendment) Regulations, 2004 dated July 7, 2004 are being issued separately
wherever necessary.
- 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,
(Dr. Sujatha Elizabeth Prasad)
Chief General Manager