OVERSEAS
FOREIGN CURRENCY BORROWINGS BY AUTHORISED DEALERS - RATIONALISATION AND
MONITORING
A.P.
(DIR Series) (2003-04) Circular No. 81, dated 24-3-2004
Overseas Foreign Currency Borrowings by Authorised Dealers -
Rationalisation and Monitoring
Authorised Dealers (ADs) are allowed to borrow in
foreign currency in the circumstances and subject to such conditions as
mentioned under Regulation 4(2) of Notification No. FEMA 3/2000-RB dated May 3,
2000.
2. Accordingly, in terms of
paragraph No. C.5(i) of RBI Master Circular on Risk Management and
Inter-Bank Dealings dated July 1, 2003, ADs may avail of loans/overdrafts from
their head offices, overseas branches and correspondents up to 25 per cent of
their unimpaired Tier-I capital or USD 10 million (or its equivalent),
whichever is higher. In terms of paragraph No. C.5(ii) of the above
circular, ADs may avail of loans in excess of the limits prescribed above
solely for replenishing their rupee resources in India subject to certain
conditions. Further, ADs may also borrow under lines of credit from a bank or a
financial institution outside India for the purpose of granting pre-shipment or
post-shipment credit in foreign currency to their exporter constituents in
terms of and subject to the conditions prescribed in IECD Master Circular dated
July 1, 2003 on Export Credit in Foreign Currency.
3. In addition, ADs may also
avail of external commercial borrowings (ECBs) for specific purposes under the
ECB Policy against specific approval from the Reserve Bank of India.
4. It has now been decided to
rationalise the existing facilities for overseas borrowings and introduce a
monitoring and reporting system for all ADs. Accordingly, the facilities
available under paragraph Nos. C.5(i) and (ii) of the Master
Circular dated July 1, 2003 will now be replaced by a single facility in terms
of which all categories of overseas foreign currency borrowings including
existing ECBs and overdrafts in Nostro accounts not adjusted within five days,
shall not exceed 25 per cent of their unimpaired Tier-I capital as at the close
of the previous quarter, or USD 10 million (or its equivalent), whichever is
higher. Any fresh borrowing above this limit shall only be with the prior
approval of the Reserve Bank of India. Applications for fresh ECBs will be made
as per the ECB policy vide A.P. (DIR Series) Circular No. 60 dated
January 31, 2004.
5. The following transactions
would continue to be outside the limit of 25 per cent of unimpaired Tier-I
Capital or USD 10 million (or its equivalent), whichever is higher :
(i) Overseas borrowings by ADs for the purposes of financing
export credit subject to the conditions prescribed in IECD Master Circular
dated July 1, 2003 on Export Credit in Foreign Currency.
(ii) Subordinated debt placed by head offices of foreign banks
with their branches in India as Tier-II capital.
6. All ADs are advised to
report their total outstanding overseas foreign currency borrowings under all
categories as on March 20, 2004 to the Chief General Manager, Foreign Exchange
Department (Forex Markets Division, Amar Building), Central Office, RBI, by
March 31, 2004, as per format appended (Annex). Reports may be sent in
Excel format by e-mail to ecdcofmd@rbi.org.in. Similar report may be furnished
as on the last Friday of every month in order to reach Reserve Bank of India by
the 10th of the following month.
7. Necessary amendments to
the Foreign Exchange Management Regulations, 2000, shall be issued separately.
8. 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).
Overseas Foreign Currency Borrowings
as on ......
Amount (in equivalent# USD)
Sr. No. |
Item |
Amount |
|
A |
Tier-I capital as at the close of
previous quarter..... |
|
|
Category of Borrowing |
|
||
1. |
Borrowings in terms of Para C.5(i)
of Master Circular on Risk Management and Inter-Bank Dealings dated July 1,
2003 |
|
|
2. |
Borrowings in excess of the above limit
for replenishment of rupee resources (Para C.5(ii)*) |
|
|
3. |
External Commercial Borrowings |
|
|
4. |
Borrowings under following scheme as
per IECD Master Circular on Export Credit in Currency dated July 1, 2003
& Regulation 4.2(iv) of Notification No. FEMA 3/2000-RB dated May
3, 2000 |
|
|
|
(a) |
Lines of Credit for extending Pre-Shipment
Credit in Foreign Currency (PCFC) |
|
|
(b) |
Bankers Acceptance Facility (BAF)/Loan
from overseas for extending Rediscounting of Export Bills Abroad Scheme (EBR) |
|
5. |
Subordinated debt for inclusion in
Tier-II capital |
|
|
6. |
Any other category (please specify) |
|
|
7. |
Total |
|
|
8. |
Borrowings under categories (1+2+3+6)
expressed as a percentage of Tier-I capital at A |
|
Note : 1.
#RBI reference rate and New York closing rates on the date of report may be
used for conversion purpose.
2. *Facility
since withdrawn vide para 4 of this circular.