RBI/2009-10/311
A. P. (DIR Series) Circular No.33
February 09, 2010
To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy - Liberalisation
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 and the A.P. (DIR Series)
Circular No. 5 dated
August 1, 2005 relating to the External Commercial Borrowings (ECB).
- As per the extant ECB procedures, any changes in the terms and conditions of
the ECB after obtaining the Loan Registration Number (LRN) from the Department
of Statistics and Information Management (DSIM), Reserve Bank, require the prior
approval of the Reserve Bank. Accordingly, the requests of the borrowers for
changes in the terms and conditions, such as, drawdown / repayment schedules,
currency of borrowing and changes in designated AD bank, name of the borrowing
company, etc. are referred to the Reserve Bank 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:
- Changes / modifications in the drawdown / repayment schedule
Designated AD Category – I banks may 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. The changes
in the drawdown / repayment schedule should be promptly reported to the DSIM,
Reserve Bank in Form 83. However, any elongation / rollover in the repayment on
expiry of the original maturity of the ECB would require the prior approval of
the Reserve Bank.
- Changes in the currency of borrowing
Designated AD Category I banks may allow changes in the currency of borrowing,
if so desired, by the borrower company, in respect of ECBs availed of both under
the automatic and the approval routes, subject to all other terms and conditions
of the ECB remaining unchanged. Designated AD banks should, however, ensure that
the proposed currency of borrowing is freely convertible.
- Change of the AD bank
Designated AD Category - I banks may allow change of the existing designated AD
bank by the borrower company for effecting its transactions pertaining to the
ECBs subject to No-Objection Certificate (NOC) from the existing designated AD
bank and after due diligence.
- Changes in the name of the Borrower Company
Designated AD Category - I banks may allow changes in the name of the borrower
company subject to production of supporting documents evidencing the change in
the name from the Registrar of Companies.
- The modifications to the ECB guidelines will come into force with immediate
effect. All other aspects of the ECB policy, such as USD 500 million limit per
company per financial year under the automatic route, eligible borrower, recognised lender, end-use, all-in-cost ceiling, average maturity period,
prepayment, refinancing of existing ECB and reporting arrangements remain
unchanged.
- AD Category –I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
- 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
(Salim Gangadharan)
Chief General Manager-in-Charge