A.P. (DIR Series) Circular No.9
All Category-I Authorised Dealer
Madam / Sir
Commercial Borrowings (ECB) Policy - Liberalisation
Attention of Authorized Dealer
Category-I (AD Category-I) banks is invited to paragraphs 2.4.1 and 3.3.3
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.
2. It has been decided, in
consultation with the Government of India, to liberalise some aspects of
the ECB policy including policy on Rupee denominated bonds as indicated
(i) ECBs by companies in
manufacturing sector: As
per the extant norms, ECB up to USD 50 million or its equivalent can be
raised by eligible borrowers with minimum average maturity period of 3
years. It has been decided to allow eligible ECB borrowers who are into
manufacturing sector to raise ECB up to USD 50 million or its equivalent
with minimum average maturity period of 1 year.
(ii) Underwriting and market
making by Indian banks for Rupee denominated bonds (RDB) issued overseas: Presently, Indian banks, subject to applicable
prudential norms, can act as arranger and underwriter for RDBs issued
overseas and in case of underwriting an issue, their holding cannot be more
than 5 per cent of the issue size after 6 months of issue. It has now been
decided to permit Indian banks to participate as
arrangers/underwriters/market makers/traders in RDBs issued overseas
subject to applicable prudential norms.
3. All other provisions 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
4. The aforesaid Master Direction No. 5 dated January 01, 2016 is
being updated to reflect the above changes.
5. 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