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External Commercial Borrowings (ECB) from Foreign Equity Holder*

As per the extant ECB policy, ECBs from direct foreign equity holders (FEHs) are considered both under the automatic and the approval routes, as the case may be. ECBs from indirect equity holders and group companies and ECBs from direct FEH for general corporate purpose are, however, considered under the approval route. Further, any request for change of the ECB lender in case of FEH requires RBI’s approval.

As a measure of simplification of the existing procedure, it has been decided to delegate powers to AD banks to approve the following cases under the automatic route:

i. Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies.

ii. Proposals for raising ECB for companies in miscellaneous services from direct / indirect equity holders and group companies. Miscellaneous services mean companies engaged in training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector. Companies doing trading business, companies providing logistics services, financial services and consultancy services are, however, not covered under the facility.

iii. Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors for general corporate purpose.ECB for general corporate purpose (which includes working capital financing) is, however, permitted only from direct equity holder.

iv. Proposals involving change of lender when the ECB is from FEH – direct / indirect equity holders and group company.

*Reserve Bank of India Circular No. RBI/2013-14/594 A.P.(DIR Series) Circular No. 130 Dated May 16 2014

External Commercial Borrowings (ECB) Re-Schedulement of ECB*

As a measure of simplification of the existing procedures, it has been decided to delegate the power to the designated AD Category – I bank to allow re-schedulement of ECB due to changes in draw-down schedule and / or repayment schedule with the following conditions:

i. Changes, if any, in all-in-cost (AIC) is only on account of the change in average maturity period (AMP) due to re-schedulement of ECB and post re-schedulement, the AIC and the AMP are in conformity with applicable guidelines. There should not be any increase in the rate of interest and no additional cost (in foreign currency / Indian Rupees) should be involved.

ii. The re-schedulement is allowed only once, before the maturity of the ECB.

iii. If the lender is an overseas branch of a domestic bank, the prudential norms applicable on account of re-schedulement should be complied with.

iv. The changes on account of re-schedulement should be reported to DSIM through revised Form 83.

v. The ECB should be in compliance with all applicable guidelines related to eligible borrower, recognised lender, AIC, AMP, end-uses, etc.

vi The borrower should not be in the default / caution list of RBI and should not be under the investigation of Directorate of Enforcement.

The facility will be available for ECBs raised both under the automatic and approval routes. Provisions of this Circular do not apply to FCCBs.

*Reserve Bank of India Circular No. RBI/2013-14/584 A.P.(DIR Series) Circular No. 128 Dated May 9 2014