RBI/2009-10/ 292
A.P. (DIR Series) Circular No. 28
January 25, 2010
To
All Category - I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited
to the
A.P. (DIR Series) Circular No. 5 dated August 1, 2005,
A.P. (DIR Series)
Circular No. 26 dated October 22, 2008 and para 2 (v) of
A.P. (DIR Series)
Circular No.19 dated December 9, 2009 relating to External Commercial Borrowings
(ECB) for spectrum allocation.
- As per the extant policy, eligible borrowers in the telecommunication sector
are permitted to avail of ECB for the purpose of payment for spectrum
allocation, under the automatic route. Keeping in view the large outlay of funds
required to be paid directly to the Government within a limited period of time,
it has been decided to make a one-time relaxation in the end-use conditions of
the ECB policy.
- Accordingly, the payment for spectrum allocation may initially be met out of
Rupee resources by the successful bidders, to be refinanced with a long-term
ECB, under the approval route, subject to the following conditions:
The ECB should be raised within 12 months from the date of payment of the final
installment to the Government;
The designated AD - Category I bank should monitor the end-use of funds;
Banks in India will not be permitted to provide any form of guarantees; and
All other conditions of ECB, such as eligible borrower, recognized lender, all-
in-cost, average maturity, etc, should be complied with.
- Eligible borrowers in the telecommunications sector proposing to fund the
payment for Spectrum allocation directly out of the proceeds of the ECBs may
continue to avail of the ECBs under the automatic route as per the extant
policy.
- All other aspects of ECB policy, such as USD 500 million limit per company
per financial year under the automatic route, eligible borrower, recognised
lender, end-use, average maturity period, prepayment, refinancing of existing
ECB and reporting arrangements remain unchanged.
- 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
is without prejudice to permissions/approvals, if any, required under any other
law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge