External Commercial Borrowings - Prepayment
AP (DIR Series) (2002-2003) Circular No. 8, dated 5-8-2002
Authorised
dealers are aware that prepayment of External Commercial Borrowings (ECBs)
require prior approval of the Reserve Bank and the Bank considers such
applications under the following categories :
a. Where
the amount of prepayment of ECB is fully matched by way of inflow of foreign
exchange in form of foreign equity in the applicant company.
b. Where
the prepayment of ECB is being made out of the balance held in the EEFC account
of the borrower.
c. Prepayment
of ECB to the extent of 10% of the outstanding loan, once during the entire
currency of the loan.
d. Prepayment
of ECB where the residual maturity of the loan does not exceed 1 year.
2. It has
now been decided to introduce an ‘Automatic Route’ for prepayment of External
Commercial Borrowings (ECBs) for a limited period up to March 31, 2003. The
automatic route will be available only to borrowers who have complied with all
the relevant Acts, Guidelines, Rules, Regulations and/or conditions, if any, of
the Government/RBI while availing of the ECB. The eligible borrowers may avail
the automatic route of prepayment of ECBs without prior permission of Reserve
Bank subject to following conditions :—
i. Prepayment
of ECBs falling under categories (a) & (b) above, without any
limit.
ii. Prepayment
of an amount not exceeding USD 50 million for ECBs falling under categories (c)
& (d) above.
iii. Prepayment
up to USD 50 million in aggregate would be available under (ii) above
[each for categories (c) & (d)] during the currency of the
scheme.
3. Applications
for prepayment of amount exceeding USD 50 million falling under categories (c)
& (d) above and all prepayments of ECBs not covered by the Automatic
Route shall continue to require prior approval of the Reserve Bank.
4. Accordingly,
designated branches of authorised dealers may allow remittances for prepayment
of ECBs upto March 31, 2003, after obtaining a certificate from the company
secretary/auditors of the applicant, indicating that the borrower—
i. is
eligible for prepayment under Automatic Route,
ii. has
availed and utilised the loan in accordance with all relevant Acts,
RBI/Government Rules, Regulations and Guidelines, and
iii. has
submitted all the ECB-2 Returns to the concerned regional office of the Reserve
Bank.
5. The
authorised dealers shall forward a report in Form ECB-PAR (Format enclosed)
within 7 days of the remittance, to the Chief General Manager, Exchange Control
Department, ECB Division, Central Office, Reserve Bank of India, Fort, Mumbai -
400 001.
6. It is
clarified that the facility under the Automatic Route for prepayment of ECBs as
contained in this circular, will be available upto March 31st, 2003. A circular
will be issued on or before that date in case the scheme is extended for a
further period.
7. Authorised
Dealers may bring the contents of the circular to the notice of their
constituents concerned.
8. The
directions contained in this circular have been issued under section 10(4) and
section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).