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RBI/2016-17/92
A.P. (DIR Series) Circular No. 10
October 20, 2016
To
All Category - I Authorised Dealer Banks
Madam/Sir,
External Commercial Borrowings (ECB) – Extension
and conversion
Attention of Authorised Dealer Category-I (AD Category-I)
banks is invited to paragraph No. C.14, F.18 and F.19 of Annex to
A.P. (DIR Series) Circular No.32 dated November 30, 2015 and paragraph No.
2.10 and 2.16 of
Master Direction No.5 dated January 1, 2016 on External Commercial
Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers as amended from
time to time. Based on experience gained, it has been decided to simplify the
process of dealing with matured but unpaid ECB.
2. Under the extant ECB guidelines, designated AD Category-I
banks can approve requests from borrowers for changes in repayment schedule
during the tenure of the ECB, i.e., prior to maturity provided average maturity
and all-in-cost are in conformity with applicable ceilings/ norms. To simplify
the procedure relating to ECB, it has been decided to delegate the powers to
designated AD Category-I banks to approve requests from borrowers for extension
of matured but unpaid ECB, subject to the following conditions:
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No additional cost is incurred;
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Lender’s consent is available;
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Reporting requirements are fulfilled.
3. Further, powers are also delegated to designated AD Category – I bank to
approve cases of conversion of matured but unpaid ECB into equity subject to
same conditions as set out in paragraph 2 while ensuring that conversion is
within the terms mentioned in paragraph C.14 of Annex to
Circular dated November 30, 2015 as referred to above.
4. It should also be noted that if the ECB borrower concerned has availed
credit facilities from the Indian banking system including overseas
branches/subsidiaries, any extension of tenure / conversion of unpaid ECBs into
equity (whether matured or not) shall be subject to applicable prudential
guidelines issued by the Department of Banking Regulation of RBI, including
guidelines on restructuring. Further, such conversion into equity shall also be
subject to consent of other lenders, if any, to the same borrower or at least
information regarding conversions shall be exchanged with other lenders of the
borrower.
5. All other aspects of the ECB policy shall remain unchanged. AD Category -
I banks should bring the contents of this circular to the notice of their
constituents and customers.
6. The aforesaid
Master Direction No. 5 dated January 01, 2016 is being updated to reflect
the changes.
7. The directions contained in this circular have been issued under section
10(4) and 11(2) 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,
(Shekhar Bhatnagar)
Chief General Manager-in-Charge
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