A.P. (DIR Series) Circular No.130
May 16, 2014
All Category – I Authorised Dealer Banks
External Commercial Borrowings (ECB) from Foreign Equity Holder – Simplification of Procedure
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the A.P. (DIR Series) Circular No. 05 dated August 01, 2005 as amended from time to time relating to the External Commercial Borrowings (ECB). Attention is also invited to A. P. (DIR Series) Circular No. 11 dated September 07, 2011, A.P. (DIR Series) Circular No. 29 dated September 26, 2011, and A.P. (DIR Series) Circular No. 31 dated September 04, 2013.
2. 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.
3. 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:
4. All other terms and conditions stipulated in the relative circulars shall continue to be applicable.
5. Other aspects of the ECB policy such as eligible borrower, recognised lender, permitted end-use, amount of ECB, all-in-cost, average maturity period, pre-payment, ECB liability:equity ratio, refinance of existing ECB, reporting arrangements, etc. shall remain unchanged.
6. These changes will come into force with immediate effect.
7. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers.
8. 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.
(Rudra Narayan Kar)
Chief General Manager-in-Charge