RBI/2011-12/367
A.P. (DIR Series) Circular No.70
January 25, 2012
To
All Authorised Dealer Category- I Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy – Infrastructure
Finance Companies (IFCs)
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
A.P. (DIR Series) Circular No. 5 dated August 1, 2005, amended from time to time
and
A. P. (DIR Series) Circular No. 51 dated May 11, 2010 relating to External
Commercial Borrowings (ECBs). As per the extant guidelines, Non-Banking Finance
Companies (NBFCs) categorized as Infrastructure Finance Companies (IFCs) by the
Reserve Bank and complying with the norms prescribed in the DNBS Circular
DNBS.PD.CC.No.168/03.02.089/2009-10 dated February 12, 2010 are permitted to
avail of ECBs, including the outstanding ECBs, up to 50 per cent of their owned
funds under the automatic route. ECBs by IFCs above 50 per cent of their owned
funds are being considered under the approval route. The permitted end-use
should be for on-lending to the infrastructure sector, as defined under the
extant ECB policy. IFCs should also hedge their currency risk in full.
- It has now been decided that the designated AD Category – I banks should
certify the leverage ratio (i.e. outside liabilities/owned funds) of IFCs
desirous of availing ECBs under the approval route while forwarding such
proposals to the Reserve Bank of India.
- All other aspects of the ECB policy, such as eligible borrower, recognised
lender, maximum permissible limit under the automatic route, average maturity,
all-in-cost, end-use, 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.
- 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