Maturity Period Revised on ECB Limit under Automatic Route
[RBI
Circular No. 64 dated 5th January 2012]
Sub: External
Commercial Borrowings (ECB)
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, Foreign Exchange
Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations,
2004 issued vide Notification No.FEMA.120/RB-2004 dated July 7, 2004, as
amended from time to time, A.P. (DIR Series) Circular No. 5 dated August 1,
2005, as amended from time to time, A.P. (DIR Series) Circular No.17 dated
December 4, 2006, A.P. (DIR Series) Circular No. 1 dated July 04, 2011 and A.P.
(DIR Series) Circular No. 27 dated September 23, 2011 relating to the External
Commercial Borrowings (ECB).
2. The ECB limit
for eligible borrowers under the automatic route was enhanced to USD 750
million or equivalent per financial year per borrower for permissible end-uses
under the automatic route vide A.P. (DIR Series) Circular No. 27 dated
September 23, 2011. Consequent to the enhancement in limits, the revised
average maturity guidelines under the automatic route are as follows:-
a) ECB up to USD
20 million or equivalent in a financial year with minimum average maturity of
three years; and
b) ECB above USD
20 million and up to USD 750 million or equivalent with minimum average
maturity of five years.
3. Accordingly,
the requirement of average maturity period, prepayment and call / put options
specified vide A.P. (DIR Series) Circular No.17 dated December 4, 2006 (for
additional amount of USD 250 million) has been dispensed with.
4. It is also
clarified that the eligible borrowers under the automatic route can raise
Foreign Currency Convertible Bonds (FCCBs) up to USD 750 million or equivalent
per financial year for permissible end-uses. Similarly, corporates in specified
service sectors, viz. hotel, hospital and software, can raise FCCBs up to USD
200 million or equivalent for permissible end-uses during a financial year
subject to the condition that the proceeds of the ECB should not be used for
acquisition of land.
5. Vide para 2(viii) of A.P. (DIR Series) Circular No.01 dated July
04, 2011, ECB / FCCB availed of for the purpose of refinancing the existing
outstanding FCCB were to be reckoned as part of the limit of USD 500 million
available under the automatic route as per the extant norms. Consequent to the
enhancement in the limits under the automatic route, it is clarified that the
ECB / FCCB availed of for the purpose of refinancing the existing outstanding
FCCB will be reckoned as part of the limit of USD 750 million available under
the automatic route as per the extant norms.
6. All other
aspects of the ECB policy, such as eligible borrower, recognised lender,
all-in-cost, end-use, prepayment, refinancing of existing ECB and reporting
arrangements shall remain unchanged.
7. Necessary
amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000 dated May 3, 2000 and Foreign Exchange Management
(Transfer or Issue of any Foreign Security) (Amendment) Regulations, 2004 dated
July 7, 2004 are being issued separately wherever necessary.
8. AD Category -
I banks may bring the contents of this circular to the notice of their
constituents and customers.
9. 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.