RESERVE BANK OF INDIA
Foreign Exchange Department
Central Office
Mumbai - 400 001
A. P. (DIR Series)
Circular No.1 July 5, 2012
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Buyback / Prepayment of Foreign Currency Convertible Bonds (FCCBs)
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited
to the A.P.
(DIR Series) Circular
No. 39 dated December 08, 2008 and A.P. (DIR Series)
Circular
No.75 dated June 30, 2011 on the captioned subject.
- On a review, it has been decided to continue the scheme of buyback of FCCBs
subject
to certain modifications.
- Accordingly, Reserve Bank will consider proposals from Indian companies for
buyback
of FCCBs under the approval route subject to:
- The buyback value of the FCCBs shall be at a minimum discount of five per
cent on the
accreted value.
- In case the Indian company is planning to raise a foreign currency borrowing
for
buyback of the FCCBs, all FEMA rules/ regulations relating to foreign currency
borrowing
shall be complied with.
- All other terms and conditions as stipulated in paragraph 5 of A.P. (DIR
Series) Circular
No. 39 dated December 8, 2008 will continue to be applicable.
- This facility shall come into force with immediate effect and the entire
process of
buyback should be completed by March 31, 2013 after which the scheme lapses.
- The existing requirement of submission of ECB 2 return will continue as
hitherto.
Further, on completion of the buyback, a report giving details of buyback, such
as, the
outstanding amount of FCCBs, accreted value of FCCBs bought back, rate at which
FCCBs bought back, amount involved, and source/s of funds may be submitted,
through
the designated AD Category - I bank, to the Reserve Bank.
- AD Category - I banks may bring the contents of this circular to the notice
of their
constituents and customers concerned.
- 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,
(Rashmi Fauzdar)
Chief General Manager
RBI/2012-13/114