EXTERNAL COMMERCIAL BORROWINGS-SIMPLIFICATION OF PROCEDURE

The Reserve Bank of India (RBI) has simplified the procedure under External Commercial Borrowings (ECB) guidelines for change of the lender for an existing ECB vide A.P (DIR Series) Circular No. 11 dated September 07, 2011.

The highlights of the above circular are outlined below:

1.  Prior to the above circular, if the borrower sought for change in the ECB lender then he was required to make such request for change to Authorised Dealer Bank, which was supposed to forward such request to RBI for its approval which consumed a lot of time.
2.  Now with immediate effect, any request for change in the existing ECB lender may be approved by the AD Category-I Banks when the original lender is an international bank or a multilateral financial institution (such as IFC, ADB, CDC, etc.) or a regional financial institution or a Government owned development financial institution or an export credit agency or supplier of equipment and the new lender also belongs to any one of the above mentioned categories, subject to the Authorised Dealer ensuring the following conditions:-
   

   (i) the new lender is a recognized lender as per the extant ECB norms;

   (ii) there is no change in the other terms and conditions of the ECB; and

   (iii) the ECB is in compliance with the extant guidelines.

   Exception to the above:

   Changes in the recognized lender in case of foreign equity holder and foreign collaborator will continue to be examined by the RBI.

3. The changes in the recognized lender shall be reported to the Department of Statistics and Information Management, Reserve Bank of India in Form 83.
4.  All other aspects of the ECB policy, such as, USD 500 million limit per company per financial year under the automatic route, eligible borrower, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.