A.P. (DIR Series) Circular No.10
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 2.4.5, 2.4.6 and
2.5 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. Under the extant policy, ECB
can be raised under tracks I and III for working capital purposes if such
ECB is raised from direct and indirect equity holders or from a group
company, provided the loan is for a minimum average maturity of 5 years. It
has been decided, in consultation with the Government of India, to liberalise
the said provision and permit public sector Oil Marketing Companies (OMCs)
to raise ECB for working capital purposes with minimum average maturity
period of 3/5 years from all recognized lenders under the automatic route.
3. Further, the individual limit
of USD 750 million or equivalent and mandatory hedging requirements as per
the ECB framework have also been waived for borrowings under this
dispensation. However, OMCs should have a Board approved forex mark to
market procedure and prudent risk management policy, for such ECBs.
4. The overall ceiling for such
ECBs shall be USD 10 billion equivalent and the said facility will come
into effect from the date of this Circular. 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
5. The aforesaid Master Direction No. 5 dated January 01, 2016 is
being updated to reflect the above changes.
6. 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