A.P. (DIR Series)
(2003-04) Circular No. 82, dated 1-4-2004
External Commercial
Borrowings (ECB) - clarifications
The
External Commercial Borrowings (ECB) guidelines were revised vide A.P.
(DIR Series) Circular No. 60, dated January 31, 2004. The Reserve Bank has been
receiving a number of queries relating to various aspects of the ECB
guidelines. Our clarifications on these issues are set out below :
2. End-use
- Prior to February 1, 2004, eligible borrowers were permitted to raise ECB
under the Automatic Route equivalent to USD 50 million per financial year for
general corporate purpose. Under the revised ECB guidelines, however, end-uses
of ECB for working capital, general corporate purpose and repayment of existing
Rupee loans are not permitted.
3. Amount
of ECB under the Automatic Route - It is clarified that the maximum amount
of ECB which can be raised by an eligible borrower under the Automatic Route is
USD 500 million or equivalent during a financial year.
4. Submission
of ECB - 2 Return - Borrowers availing ECB since February 1, 2004 are
required to submit ECB-2 Return on a monthly basis certified by the designated
Authorised Dealer (AD) so as to reach the Director, Balance of Payments Statistics
Division, Department of Statistical Analysis and Computer Services (DESACS),
Reserve Bank of India, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051
within seven working days from the close of month to which it relates. It is
clarified that all existing borrowers are also required to submit ECB-2 Return
on a monthly basis from January 2004 onwards as mentioned above.
5. Compliance
with ECB Guidelines - The primary responsibility to ensure that ECB
raised/utilised are in conformity with the Reserve Bank instructions is that of
the concerned borrower and any contravention of the ECB guidelines will be
viewed seriously and may invite penal action. The designated AD is also
required to ensure that raising/utilisation of ECB is in compliance with ECB guidelines
at the time of certification.
6. ECB
under erstwhile USD 5 Million Scheme - At present, borrowers, who had
availed ECB under erstwhile USD 5 Million Scheme with specific approval of
Reserve Bank, approach the Reserve Bank for elongation of repayment period. It
has been decided to delegate general permission to the designated AD to approve
such elongation provided there is a consent letter from the overseas lender for
such reschedulement without any additional cost. Such approval with existing and
revised repayment schedule along with the Loan Key/Loan Registration Number
should be initially communicated to the Chief General Manager, Foreign Exchange
Department, Reserve Bank of India, Central Office, ECB Division, Mumbai within
seven days of approval and subsequently in ECB-2.
7. Authorised
Dealers may bring the contents of this 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).
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