RESERVE BANK OF INDIA
Foreign Exchange Department
Central Office
Mumbai - 400 001
A. P. (DIR Series) Circular No. 111
April 20, 2012
To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy –
Liberalisation and Rationalisation
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 and
A.P. (DIR Series) Circular No. 5 dated August 1, 2005, as amended from
time to time, relating to External Commercial Borrowings.
- 2. On a review of the policy related to ECB and keeping in view the
announcements made in the Union Budget for the Year 2012-13, it has been decided
to further rationalize and liberalize the extant guidelines as under:-
- Enhancement of Refinancing limit for Power Sector
Indian companies in the power sector will be allowed to utilise 40 per cent of
the fresh ECB raised towards refinancing of the Rupee loan/s availed by them
from the domestic banking system, under the approval route, subject to the
condition that at least 60 per cent of the fresh ECB proposed to be raised
should be utilised for fresh capital expenditure for infrastructure project(s).
All other terms and conditions relating to refinancing of Rupee loans mentioned
in
A.P. (DIR Series) Circular No. 25 dated September 23, 2011 remain unchanged.
- ECB for Maintenance and Operation of Toll systems for Roads and Highways
ECBs would also be allowed for capital expenditure under the automatic route for
the purpose of maintenance and operations of toll systems for roads and highways
provided they form part of the original project.
- The modifications to the ECB policy will come into force with immediate
effect. All other aspects of the ECB policy, such as, maximum permissible limit
under the automatic route, eligible borrower, recognised lender, average
maturity, all-in-cost, 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
RBI/2011-12/519