RBI Liberalizes ECB Norms

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Reserve Bank of India or RBI on Tuesday liberalized, with immediate effect, the External Commercial Borrowings or ECB policy to speed up ECB transactions.

As per the liberalized guidelines, banks will be able to make changes/modifications to the draw-down or repayment schedule of the ECBs already availed of, both under the approval and the automatic routes, if the average maturity of the loan is maintained.

Designated AD (authorized dealer) Category I banks may allow changes in the currency of borrowing, in respect of ECBs availed of, both under automatic and approval routes, if all other terms and conditions remained unchanged, said a circular of the apex bank.

Designated AD banks should, however, ensure that the proposed currency of borrowing is freely convertible. This is used when a borrower wants to shift from a volatile currency to a more stable one.

To change of the AD bank, the RBI said, the designated AD banks may allow change of the existing designated AD bank by the borrower company for effecting its transactions, provided a No-Objection Certificate is produced from the existing designated AD bank.

All other aspects of the ECB policy are unchanged. These included the $ 500-million limit per company per financial year under the automatic route, eligible borrower, recognized lender, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements.

Bankers reportedly said the move would simplify ECB procedure. However, it is unlikely to have an impact either on ECB volumes or overhead costs.

(Market News Provided by RTTNews)