Reserve bank of India
A.P. (DIR Series) Circular No. 12
July 15, 2013
To
All Category - I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy
Repayment of Rupee loans and/or fresh Rupee
capital expenditure – USD 10 billion Scheme
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited
to
A.P. (DIR Series) Circular No. 134 dated June 25, 2012,
A.P. (DIR Series)
Circular No. 26 dated September 11, 2012 and
A.P.(DIR) Circular No.78 dated
January 21, 2013 on the captioned scheme.
- As per the extant guidelines, Indian companies in the manufacturing,
infrastructure sector (as defined under the extant ECB policy) and hotel sector,
which are consistent foreign exchange earners, are allowed to avail of ECB for
repayment of outstanding Rupee loan(s) availed of from the domestic banking
system and / or for fresh Rupee capital expenditure under the Approval Route.
- On a review, it has been decided to extend the benefit of USD 10 billion
scheme to Indian companies in the aforesaid sectors which have established Joint
Venture (JV) / Wholly Owned Subsidiary (WOS) / have acquired assets overseas in
compliance with extant regulations under FEMA, 1999 subject to the conditions as
under:
- ECB can be availed of for repayment of all term loans having average
residual maturity of 5 years and above / credit facilities availed of by Indian
companies from domestic banks for overseas investment in JV/WOS, in addition to
‘Capital Expenditure’;
- ECB can be availed of within the scheme based on the higher of 75 per cent
of the average foreign exchange earnings realized during the past three
financial years and / or 75 per cent of the assessment made about the average of
foreign exchange earnings potential for the next three financial years of the
Indian companies from the JV / WOS / assets abroad as certified by Statutory
Auditors / Chartered Accountant / Certified Public Accountant / Category I
Merchant Banker registered with SEBI / an Investment Banker outside India
registered with the appropriate regulatory authority in the host country;
- ECB availed of under the scheme will have to be repaid out of forex earnings
from the overseas JV / WOS / assets.
- The past earnings in the form of dividend/repatriated profit/ other forex
inflows like royalty, technical know-how, fee, etc from overseas JV/WOS/assets
will be reckoned as foreign exchange earnings for the purpose of US$ 10 billion
scheme.
- All other aspects of the scheme shall remain unchanged. The amended ECB
policy will come into force with immediate effect and is subject to review based
on the experience gained in this regard.
- 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
Rudra Narayan Kar
Chief General Manager-in-Charge
RBI/2013-14/137