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RBI/2016-17/316
A. P. (DIR Series) Circular No.47
June 7th, 2017
To,
All Authorised Dealer Category – I Banks
Madam/Sir,
Issuance of Rupee denominated bonds overseas
Attention of Authorized Dealer Category - I (AD Category - I) banks is
invited to Sr. No. 3, 4 and 5 of Annex to
A.P.(DIR Series) Circular No.17 dated
September 29th, 2015, paragraph No. 2, 3, 4 and 5 of
A.P. (DIR Series) Circular
No. 60 dated April 13th, 2016, paragraph No. 2 of
A.P. (DIR Series) Circular No.
31 dated February 16th, 2017 and paragraph No. 3.2, 3.3.1, 3.3.3 and 3.3.4 of
Master Direction No.5 dated January 1st, 2016 on ‘External Commercial Borrowings,
Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers
and Persons other than Authorised Dealers’ (Master Direction), as amended from
time to time, on the provisions of available routes of borrowing, recognized
lender and all-in-cost, etc. under the framework for issuance of Rupee
denominated bonds overseas.
2. On a review of the laid down framework for issuance of Rupee denominated
bonds overseas (Masala Bonds) and with a view to harmonize the various elements
of the ECB framework, it has been decided that any proposal of borrowing by
eligible Indian entities by issuance of these bonds will be examined at the
Foreign Exchange Department, Central Office, Mumbai. Further, it has also been
decided to revise the provisions in respect of maturity period, all-in-cost
ceiling and recognized lenders (investors) of Masala Bonds as under:
Maturity period: Minimum original maturity period for Masala Bonds raised
upto USD 50 million equivalent in INR per financial year should be 3 years and
for bonds raised above USD 50 million equivalent in INR per financial year
should be 5 years.
All-in-cost ceiling: The all-in-cost ceiling for such bonds will be 300 basis
points over the prevailing yield of the Government of India securities of
corresponding maturity.
Recognised investors: Entities permitted as investors under the provisions of
paragraph 3.3.3 of the Master Direction but should not be related party within
the meaning as given in Ind-AS 24.
3. All other provisions of aforesaid circulars dated September 29, 2015,
April 13th, 2016 and February 16th, 2017 remain unchanged. AD Category-I banks may
bring the contents of this circular to the notice of their constituents and
customers.
4. The changes / revised instructions in respect of issuance of Rupee
denominated bonds will be applicable from the date of issuance of this circular.
5. Relevant paragraphs of the Master Directions No. 5 dated January 01st, 2016
issued by RBI are being updated to reflect the changes.
6. 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
(J K Pandey)
Chief General Manager
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