RBI further eases norms for external commercial borrowings
07 February 2012
The Reserve Bank of India has further simplified norms for external commercial borrowing (ECB) by delegating powers to the designated authorised banks to approve reduction in ECB amount as also changes or modifications in the drawdown and repayment schedule, subject to specified conditions.
RBI has authorised designated authorised banks powers to approve requests from ECB borrowers for reduction in loan amount in respect of ECBs availed under the automatic route.
For this the borrower should have obtained the consent of the lender, maintain the average maturity period of the ECB, submit the monthly ECB-2 returns in respect of the LRN to the RBI's department of statistics and information management (DSIM) and there should be keep all other terms and conditions of the ECB in tact.
As per the extant procedures, designated banks have been delegated powers to approve changes / modifications in the drawdown / repayment schedule of the ECBs already availed, both under the approval and the automatic routes, subject to the condition that the average maturity period, as declared while obtaining the LRN, is maintained.
Designated banks may approve requests from borrowers for changes/modifications in the drawdown schedule resulting in the original average maturity period undergoing change in respect of ECBs availed both under the automatic and approval routes.
For this there should be no changes/modifications in the repayment schedule of the ECB; the average maturity period of the ECB is reduced as against the original average maturity period stated in Form 83 at the time of obtaining the LRN; such reduced average maturity period should be in compliance with the stipulated minimum average maturity period as per the extant ECB guidelines; the change in all-in-cost is only due to the change in the average maturity period and the ECB complies with the extant guidelines; and the monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.
Any rollover in the repayment, on expiry of the original maturity of the ECB would, however, continue to require the prior approval of the Reserve Bank, it said.