RBI delegates powers to cancel ECB loan registrations to authorised banks

RBI has delegated powers for cancellation of loan registration numbers for external commercial borrowings (ECBs) to the designated authorised dealer banks, in a bid to simplify procedures.

Accordingly, corporates opting to cancel ECB loan registrations can get it cancelled by authorised dealer (Category 1) banks instead of approaching the Reserve Bank of India (RBI).

RBI, however, said authorised dealer banks have to make sure that the borrowers fulfil certain conditions before approving any request for cancellation of LRN.

Authorised dealer banks may directly approach the Department of Statistics and Information Management of the RBI for cancellation of LRN for ECBs availed - both under the automatic and approval routes - provided no draw down for the said LRN has taken place and the monthly ECB-2 returns till date in respect of the LRN have been submitted to DSIM.

The designated bank may approve requests from ECB borrowers for change in end-use in respect of ECBs availed under the automatic route, provided:

  • The proposed end-use is permissible under the automatic route as per the extant ECB guidelines;
  • There is no change in the other terms and conditions of the ECB;
  • The ECB is in compliance with the extant guidelines; and
  • The monthly ECB-2 returns till date in respect of the LRN have been submitted to DSIM.

Authorised banks should continue to monitor the utilisation of end-use proceeds and changes in the end-use and promptly report it to DSIM, RBI.

However, changes in the end-use of ECBs availed under the approval route will continue to be referred to the Foreign Exchange Department, Central Office, Reserve Bank of India, as hitherto, RBI said.

The revised ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy, such as, $750 million limit per company per financial year under the automatic route, eligibility, recognised lender, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements will remain unchanged, RBI said.

As per the extant ECB procedures any request for cancellation of loan registration number (LRN) given by the department of statistics and information management (DSIM), Reserve Bank of India.

Any change in permissible end-use for an existing ECB is also required to be referred by the authorised dealer bank to the Foreign Exchange Department, Central Office, RBI for necessary approval.