RBI/2009-10/456
A. P. (DIR Series) Circular No. 51
May 11, 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.05 dated August 1, 2005 and
A.P. (DIR
Series) Circular No.39 dated March 02, 2010 relating to External Commercial
Borrowings (ECB).
- On a review of the policy, it has been decided to modify the extant ECB
policy in respect of the Infrastructure Finance Companies (IFCs) i.e. Non
Banking Financial Companies (NBFCs) categorised as IFCs by the Reserve Bank. As
per the extant norms, IFCs have been permitted to avail of ECBs for on-lending
to the infrastructure sector, as defined in the extant ECB policy, under the
approval route. As a measure of liberalisation of the existing procedures, it
has been decided to permit the IFCs to avail of ECBs, including the outstanding
ECBs, up to 50 per cent of their owned funds under the automatic route, subject
to their compliance with the prudential guidelines already in place. ECBs by
IFCs above 50 per cent of their owned funds would require the approval of the
Reserve Bank and will, therefore, be considered under the approval route.
Designated Authorized Dealer banks should ensure compliance with the extant
norms while certifying the ECB application both under the automatic and approval
routes.
- All the 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