External Commercial Borrowings - Procedures relaxed
10th February, 2012
Designated AD category-I banks have been delegated powers to approve
requests for reduction in loan amount of External Commercial Borrowings (ECBs).
These banks have also been empowered to consider changes in drawdown schedule
where original average maturity period is not maintained and for reduction in
all-in-cost of ECB.
Hitherto, AD Category-I banks were required to refer such matters to the
Foreign Exchange Department of Reserve Bank of India for necessary approval. RBI’s
A.P. (DIR Series) Circular No.75 dated 7-2-2012 issued in this regard, while
simplifying the procedure also prescribes certain conditions including filing
of ECB-2 monthly returns in respect of the Loan Registration Number.
In case of ECBs availed under the automatic route, requests for
reduction in the loan amount may be approved by AD Category-I banks if the same
has consent of the lender, average maturity period is maintained with no change
in other terms and conditions of the borrowing.
AD Category-I banks can also approve changes in the drawdown
schedule resulting in further changes in the original average
maturity period for ECBs availed under both automatic and approval routes. For such
approval there should not be any modification in the repayment schedule, the
average maturity period is reduced as against original average maturity period
and such reduced period complies with the stipulated minimum average maturity
period. Prior approval of RBI would be required, as at present, for elongation or rollover in repayment, on
expiry of the original maturity of the ECB.
As for reduction in all-in-cost of the ECB,
such specified banks can grant approval if there is consent of the lender with
no other change in terms and conditions.