RBI eases ECB norms, gives more power to banks-February 2010

February 09, 2010: 

As per the extant ECB procedures, 
any changes in the terms and conditions of the ECB after
obtaining the Loan Registration Number (LRN) from the 
Department of Statistics and Information Management (DSIM),
Reserve Bank, require the prior approval of the Reserve Bank.

Accordingly, the requests of the borrowers for changes in the
terms and conditions, such as, drawdown / repayment schedules, 
currency of borrowing and changes in designated AD bank, 
name of the borrowing company, etc. are referred to the
Reserve Bank for necessary approval. 



As a measure of simplification of the existing procedures,
Reserve Bank of India has decided to delegate powers to 
the designated AD category-I banks to approve the following
requests from the ECB borrowers, subject to specified conditions:

a) Changes / modifications in the drawdown / repayment schedule

Designated AD Category – I banks may approve changes /
modifications in the drawdown / repayment schedule of the 
ECBs already availed, both under the approval and the automatic
routes, subject to the condition that the average maturity period, 
as declared while obtaining the LRN, is maintained. 

The changes in the drawdown / repayment schedule should
be promptly reported to the DSIM, Reserve Bank in Form 83. 

However, any elongation / rollover in the repayment on expiry
of the original maturity of the ECB would require the prior approval 
of the Reserve Bank.

b) Changes in the currency of borrowing

Designated AD Category I banks may allow changes
in the currency of borrowing, if so desired, by the borrower
company, in respect of ECBs availed of both under the automatic 
and the approval routes, subject to all other terms and conditions of the ECB remaining unchanged. Designated AD banks should, however, ensure that the proposed currency of borrowing is freely convertible.

c) Change of the AD bank

Designated AD Category - I banks may allow change of the 
existing designated AD bank by the borrower company for
effecting its transactions pertaining to the ECBs subject to
No-Objection Certificate (NOC) from the existing designated AD bank and after due diligence.

d) Changes in the name of the Borrower Company

Designated AD Category - I banks may allow changes in
the name of the borrower company subject to production 
of supporting documents evidencing the change in the 
name from the Registrar of Companies.

The modifications to the ECB guidelines have come into
force with immediate effect. All other aspects of the ECB 
policy, such as USD 500 million limit per company per 
financial year under the automatic route, eligible borrower, 
recognised lender, end-use, all-in-cost ceiling, average 
maturity period, prepayment, refinancing of existing ECB 
and reporting arrangements remain unchanged.