CHEMEXCIL
Basic Chemicals, Cosmetics & Dyes Export Promotion Council
(Set-up by Ministry of Commerce and Industry, Govt of India)
Jhansi Castle, 4th Floor, 7, Cooperage Road, Mumbai - 400 001. India
Tel : +91 22 22021288 Website : www.//chemexcil.in
EPC/LIC/RBI/ECB 22/01/2019
ALL THE MEMBERS OF THE COUNCIL
RBI
External Commercial Borrowings (ECB) Policy – New ECB Framework
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Dear Members,
We would like to inform you that the Reserve Bank of India (RBI) has issued circular vide A.P. (DIR Series) Circular No. 17 dated January 16, 2019 regarding External Commercial Borrowings (ECB) Policy – New ECB Framework.
We understand from the RBI circular that, it has been decided, to rationalise the extant framework for ECB and Rupee Denominated Bonds in light of the experience gained to improve the ease of doing business.
The salient features of the new framework are reproduced/ highlighted as follows for the information of the member-exporters:
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Eligible Borrowers: This has been expanded to include all entities eligible to receive FDI. Additionally, Port Trusts, Units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for profit companies, registered societies/trusts/cooperatives and non-government organisations can also borrow under this framework.
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Minimum Average Maturity Period (MAMP): MAMP will be 3 years for all ECBs. However, for ECB raised from foreign equity holder and utilised for specific purposes, as detailed in the Annex, the MAMP would be 5 years. Similarly, for ECB up to USD 50 million per financial year raised by manufacturing sector, which has been given a special dispensation, the MAMP would be 1 year as given in the Annex.
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Late Submission Fee (LSF) for delay in Reporting: Any borrower, who is otherwise in compliance of ECB guidelines, except for delay in reporting drawdown of ECB proceeds before obtaining LRN or Form ECB 2 returns, can regularize the delay by payment of LSF as per the laid down procedure.
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ECB up to USD 750 million or equivalent per financial year, which otherwise are in compliance with the parameters and other terms and conditions set out in the new ECB framework, will be permitted under the automatic route not requiring prior approval of the Reserve Bank. The designated AD Category I bank while considering the ECB proposal is expected to ensure compliance with applicable ECB guidelines by their constituents. Any contravention of the applicable provisions will invite penal action or adjudication under the Foreign Exchange Management Act, 1999.
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Lending and borrowing under the ECB framework by Indian banks and their branches/subsidiaries outside India will be subject to prudential guidelines issued by the Department of Banking Regulation of the Reserve Bank. Further, other entities raising ECB are required to follow the guidelines issued, if any, by the concerned sectoral or prudential regulator.
Relevant member-exporters are requested to take note of this change in new ECB Framework. For further details/ Annexure, please use below link for reference.
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11456&Mode=0
Your feed-back, if any, on these changes may sent to the council on ed@chemexcil.gov.in & deepak.gupta@chemexcil.gov.in .
Thanking You,
Yours faithfully,
(S. G. BHARADI)
EXECUTIVE DIRECTOR
CHEMEXCIL
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