| Date: |
29-09-2015
|
| Notification No: |
RBI/2015-16/193 A.P. (DIR Series) Circular No.17
|
| Issuing Authority: |
RBI
|
| Type: |
A.P.D.(Series) Circulars
|
| File No: |
RBI/2015-16/193 |
| Subject: |
External Commercial Borrowings (ECB) Policy - Issuance of Rupee denominated bonds overseas
|
RBI/2015-16/193
A.P. (DIR Series) Circular No.17
September 29, 2015
To,
All Authorised Dealer Category – I Banks
Madam/ Sir
External Commercial Borrowings (ECB) Policy - Issuance of Rupee
denominated bonds overseas
Attention of Authorized Dealer Category - I (AD Category - I) banks is
invited to the provisions contained in
A.P. (DIR Series) Circular No. 5 dated
August 01, 2005 as amended from time to time on External Commercial Borrowings
(ECB).
- In order to facilitate Rupee denominated borrowing from overseas, it has been
decided to put in place a framework for issuance of Rupee denominated bonds
overseas within the overarching ECB policy. The broad contours of the framework
are as follows:
- Eligible borrowers: Any corporate or body corporate as well as Real Estate
Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
- Recognised investors: Any investor from a Financial Action Task Force (FATF)
compliant jurisdiction.
- Maturity: Minimum maturity period of 5 years.
All-in-cost: All in cost should be commensurate with prevailing market
conditions.
- Amount: As per extant ECB policy.
End-uses: No end-use restrictions except for a negative list.
- The detailed guidelines for issuance of Rupee denominated bonds overseas are
set out in the Annex.
- All other provisions of extant ECB guidelines regarding reporting
requirements (including obtaining Loan Registration Number (LRN) through
submission of Form 83 where type of ECB is to be specifically mentioned as
borrowing through issuance of Rupee denominated bonds overseas), parking of bond
proceeds, security / guarantee for the borrowings, conversion into equity, corporates under investigation, etc., not appearing in the Annex will be
applicable for borrowing by issuance of Rupee denominated bonds overseas.
- 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 Section
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
(B. P. Kanungo)
Principal Chief General Manager
Annex
Issuance of Rupee denominated bonds overseas
|
Sr. No. |
ECB parameter |
Framework |
| 1. |
Eligibility of borrowers |
Any
corporate or body corporate is eligible to
issue Rupee denominated bonds overseas. Real
Estate Investment Trusts (REITs) and
Infrastructure Investment Trusts (InvITs)
coming under the regulatory jurisdiction of
the Securities and Exchange Board of India
are also eligible. |
| 2. |
Type of instrument |
Only plain
vanilla bonds issued in a Financial Action
Task Force (FATF) compliant financial
centres; either placed privately or listed
on exchanges as per host country
regulations. |
| 3. |
Recognised investors |
Any
investor from a FATF compliant jurisdiction.
Banks incorporated in India will not have
access to these bonds in any manner
whatsoever. Indian banks, however, can act
as arranger and underwriter. In case of
underwriting, holding of Indian banks cannot
be more than 5 per cent of the issue size
after 6 months of issue. Further, such
holding shall be subject to applicable
prudential norms. |
| 4. |
Maturity |
Minimum
maturity period of 5 years. The call and put
option, if any, shall not be exercisable
prior to completion of minimum maturity. |
| 5. |
All-in-cost |
The
all-in-cost of such borrowings should be
commensurate with prevailing market
conditions. This will be subject to review
based on the experience gained. |
| 6. |
End-uses |
The
proceeds can be used for all purposes except
for the following:
- Real estate activities other than
for development of integrated township /
affordable housing projects;
- Investing in capital market and
using the proceeds for equity investment
domestically;
- Activities prohibited as per the
foreign direct investment (FDI)
guidelines;
- On-lending to other entities for any
of the above objectives; and
- Purchase of land.
|
| 7. |
Amount |
Under the
automatic route the amount will be
equivalent of USD 750 million per annum.
Cases beyond this limit will require prior
approval of the Reserve Bank. |
| 8. |
Conversion rate |
The foreign
currency - Rupee conversion will be at the
market rate on the date of settlement for
the purpose of transactions undertaken for
issue and servicing of the bonds. |
| 9. |
Hedging |
The
overseas investors will be eligible to hedge
their exposure in Rupee through permitted
derivative products with AD Category - I
banks in India. The investors can also
access the domestic market through branches
/ subsidiaries of Indian banks abroad or
branches of foreign bank with Indian
presence on a back to back basis. |
| 10. |
Leverage |
The
leverage ratio for the borrowing by
financial institutions will be as per the
prudential norms, if any, prescribed by the
sectoral regulator concerned. |
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