A.P. (DIR Series) Circular No. 10
All Category - I Authorised Dealer Banks
Commercial Borrowings (ECB) – Extension and conversion
Attention of Authorised Dealer
Category-I (AD Category-I) banks is invited to paragraph No. C.14, F.18 and
F.19 of Annex to A.P. (DIR Series) Circular
No.32 dated November 30, 2015 and paragraph No. 2.10 and 2.16
of Master Direction No.5 dated January 1,
2016 on External Commercial Borrowings, Trade Credit, Borrowing
and Lending in Foreign Currency by Authorised Dealers and Persons other
than Authorised Dealers as amended from time to time. Based on experience
gained, it has been decided to simplify the process of dealing with matured
but unpaid ECB.
2. Under the extant ECB
guidelines, designated AD Category-I banks can approve requests from
borrowers for changes in repayment schedule during the tenure of the ECB,
i.e., prior to maturity provided average maturity and all-in-cost are in
conformity with applicable ceilings/ norms. To simplify the procedure
relating to ECB, it has been decided to delegate the powers to designated
AD Category-I banks to approve requests from borrowers for extension of
matured but unpaid ECB, subject to the following conditions:
additional cost is incurred;
consent is available;
requirements are fulfilled.
3. Further, powers are also
delegated to designated AD Category – I bank to approve cases of conversion
of matured but unpaid ECB into equity subject to same conditions as set out
in paragraph 2 while ensuring that conversion is within the terms mentioned
in paragraph C.14 of Annex to Circular dated
November 30, 2015as referred to above.
4. It should also be noted that
if the ECB borrower concerned has availed credit facilities from the Indian
banking system including overseas branches/subsidiaries, any extension of
tenure / conversion of unpaid ECBs into equity (whether matured or not) shall
be subject to applicable prudential guidelines issued by the Department of
Banking Regulation of RBI, including guidelines on restructuring. Further,
such conversion into equity shall also be subject to consent of other
lenders, if any, to the same borrower or at least information regarding
conversions shall be exchanged with other lenders of the borrower.
5. All other aspects of the ECB
policy shall remain unchanged. AD Category - I banks should bring the
contents of this circular to the notice of their constituents and
6. The aforesaid Master Direction No. 5 dated January 01, 2016 is
being updated to reflect the changes.
7. The directions contained in this
circular have been issued under section 10(4) and 11(2) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
Chief General Manager-in-Charge