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Banking > > Global Lendings > ECB> Latest guidelines

Revised Guidelines For External Commercial Borrowings For 2000-2001

I ECB approvals on automatic route

The Government have decided, in principle, to place fresh ECB approvals up to USD 50 millions and all refinancing of existing ECBs under the automatic route. Necessary software and institutional arrangements are being developed to operationalise the automatic route. RBI is being requested to work out modalities for implementation.

II Delegation to RBI for fresh ECB approvals for amounts upto USD 100 million

Presently, RBI is empowered to give ECB approvals under 'USD 5 Million Scheme' and to approve ECBs upto USD 10 million under all other windows. Government have decided to delegate further the ECB sanctioning powers up to USD 100 million under all Windows to Reserve Bank of India. Corporates and institutions are advised to submit their applications to Exchange Control Department of RBI, Central Office, ECB Division, Mumbai.

III Further enhancement and delegation in respect of prepayments of ECBs

At present, prepayment approvals are being given by Ministry of Finance/RBI, depending on who had given the initial ECB approval. Henceforth, RBI will give all such approvals, as per prevailing guidelines on prepayment, even in cases where ECBs have been approved earlier by Ministry of Finance. For this purpose, Corporates concerned may approach Exchange Control Department, RBI, Central Office, ECB Division, Mumbai, through the designated authorised dealer giving details, as set out in the annexure to this Press Release, duly certified by the Statutory Auditors.

IV Definition of Infrastructure Sector for ECB purposes

Maximum limit of ECB for financing equity investment in a subsidiary/ joint venture company, implementing infrastructure projects was enhanced from USD 50 million to USD 200 million vide press release dated 9th February 2000. Similarly, ECB exposure for all infrastructure projects was enhanced to 50% of the project cost as appraised by a recognised financial institution/ bank. It was also decided to even allow exposure beyond 50% of the project cost in the case of power projects and other infrastructure projects on merits of each case. It is clarified that the following sectors will qualify as 'infrastructure sectors' under the ECB guidelines: -
Roads including bridges
Industrial parks
Urban infrastructure - Water supply, sanitation and sewage projects.

V All-in-cost ceiling

For the information of all concerned, the existing 'all-in-cost ceilings' for normal projects, infrastructure projects and for long term ECBs are 300,400 & 450 basis points over six months LIBOR, for the respective currency in which the loan is being raised or applicable bench mark(s), as the case may be.

VI Average Maturity

The average maturity of ECBs for the purpose of ECB guidelines shall be weighted average of all disbursements taking each disbursement individually and its period of retention by the borrower.

VII Structured Obligation Facility for NBFCs

Corporates can avail of the facilities under the credit enhancement scheme as per conditions stated in para 19 of the ECB guidelines. Non Banking Finance Companies (NBFCs) would also be eligible to avail of this facility on compliance with the following additional conditions: -
NBFC should be registered with RBI
It should have earned profits during the last three years
It should have secured "AA" or equivalent rating from a reputed Credit Rating Agency.

However, in the case of NBFCs where a credit enhancement guarantee has been provided by its' parent company on 'non-recourse and non-repatriable basis', the condition of three years' track record of profit will not be applicable and the credit rating of 'A or equivalent' would also be acceptable in such cases.

VIII The above changes in the approval system will be subject to observance of ECB guidelines by the borrowers.

IX The above amendments to the ECB guidelines have come into force from 14th June 2000.


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