The Reserve Bank of India (RBI) has simplified the existing procedures for external commercial borrowings (ECB) by delegating the power of approval to designated category 1 authorised dealer banks.

Authorised banks have now been allowed to approve requests from ECB borrowers with respect to change in the recognised lender without referring it to the RBI.

However, for doing this, the original lender should be 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, RBI said in a notification today.

New lenders belonging to any one of the above categories may also approve ECB, subject to the authorised dealer ensuring the following conditions:

The new lender is a recognised lender as per the extant ECB norms;

There is no change in the other terms and conditions of the ECB; and

The ECB is in compliance with the extant guidelines.

However, changes in the recognised lender in case of foreign equity holder and foreign collaborator will continue to be examined by the RBI.

The changes in the recognised lender should be promptly reported to the department of statistics and information management of the RBI in Form 83.

These modifications to the ECB guidelines will come into force with immediate effect.

All other aspects of the ECB policy, such as, $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, RBI said.

Authorised dealers grant loans to clients in India for meeting their foreign exchange requirements or for their rupee working capital requirements or capital expenditure subject to compliance with prudential norms, interest rate directives and guidelines, if any, issued by the RBI in this regard.