RBI/2011-12/201
A.P. (DIR Series) Circular No.27
September 23, 2011
To
All Authorised Dealer Category I Banks
Madam / Sir,
External Commercial Borrowings (ECB) – Rationalisation and Liberalisation
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
the Foreign Exchange Management (Borrowing or lending in foreign exchange)
Regulations, 2000, notified vide
Notification No. FEMA 3/2000-RB dated May 3,
2000, amended from time to time and the
A.P. (DIR Series) Circular No. 5 dated
August 1, 2005, amended from time to time relating to the External Commercial
Borrowings (ECB).
- On a review of the extant ECB policy, it has been decided, in consultation
with the Government of India, to further rationalise and liberalize the ECB
guidelines as under:-
- Enhancement of ECB limit under the automatic route
- Eligible borrowers in real sector-industrial sector-infrastructure sector
can avail of ECB up to USD 750 million or equivalent per financial year under
the automatic route as against the present limit of USD 500 million or
equivalent per financial year.
- Corporates in specified service sectors viz. hotel, hospital and software,
can avail of ECB up to USD 200 million or equivalent during a financial year as
against the present limit of USD 100 million or equivalent per financial year
subject to the condition that the proceeds of the ECBs should not be used for
acquisition of land.
- ECBs designated in INR
- 'All eligible borrowers' can avail of ECBs designated in INR from
foreign
equity holders under the automatic/ approval route, as the case may be, as per
the extant ECB guidelines.
- NGOs engaged in micro finance activities will, however, be permitted to
avail of ECBs designated in INR, as hitherto, under the automatic route from
overseas organizations and individuals as per the extant guidelines.
- ECB for Interest During Construction (IDC)
It has been decided to consider IDC as a permissible end-use for the Indian
companies which are in the infrastructure sector, where “infrastructure” is
defined in terms of the extant guidelines on External Commercial Borrowings
(ECB) under the automatic/approval route, as the case may be, subject to the
following conditions:-
- that the IDC is capitalized; and
- is part of the project cost.
- All other aspects of the ECB policy such as eligible borrower, recognised
lender, all-in-cost, average maturity period, prepayment, refinancing of
existing ECB and reporting arrangements shall remain unchanged
- The amended ECB policy will come into force with immediate effect and is
subject to review at any point of time.
- Necessary amendments to the Foreign Exchange Management (Borrowing or Lending
in Foreign Exchange) Regulations, 2000 dated May 3, 2000 are being issued
separately wherever necessary.
- 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 has 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