RBI/2014-15/207
A.P. (DIR Series) Circular No.25
September 3, 2014
To
All Category - I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) in Indian Rupees
Attention of Authorised Dealer Category – I (AD Category – I) banks is
invited to Regulation 6 of
Notification No. FEMA.3/2000-RB dated May 03, 2000 in terms of
which persons resident in India may raise foreign currency loans from
non-residents in accordance with the provisions contained in this Notification.
Their attention is also invited to paragraph 2(ii)(a) of
AP (DIR Series) Circular No. 27 dated September 23, 2011 in terms
of which all eligible borrowers are eligible to raise ECB in Indian Rupees from
foreign equity holders as per the extant ECB guidelines.
- With a view to providing greater flexibility for structuring of ECB
arrangements, it has been decided that recognised non-resident ECB lenders may
extend loans in Indian Rupees subject to the following conditions:
- The lender should mobilise Indian Rupees through swaps undertaken with an
Authorised Dealer Category-I bank in India.
- The ECB contract should comply with all other conditions applicable to the
automatic and approval routes as the case may be.
- The all-in-cost of such ECBs should be commensurate with prevailing market
conditions.
- For the purpose of executing swaps for ECBs denominated in Indian Rupees, the recognised ECB lender, if it desires, may set up a representative office in
India following the prescribed laid down process.
- It may be noted that the hedging arrangement for ECBs denominated in Indian
Rupees extended by non-resident equity-holders shall continue to be governed by
the provisions of
AP (DIR Series) Circular No. 63 dated December 29, 2011.
- AD Category-I banks may bring the contents of this circular to the
notice of their constituents and customers.
- 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
B P Kanungo
Principal Chief General Manager