MANU/APDR/0091/2015

Ministry : Reserve Bank of India

Department/Board : RBI A.P. DIR (Series)

Circular No. : A. P. (DIR Series) Circular No. 32
                   RBI/2015-2016/255

Date : 30.11.2015

Notification/ Circulars Referred : A.P. (DIR Series) Circular No. 5 dated August 1, 2005 MANU/APDR/0011/2005

Citing Reference:
A.P. (DIR Series) Circular No. 5 dated August 1, 2005 MANU/APDR/0011/2005  Referred

To,

All Authorised Dealer Category - I Banks

Madam/ Sir

External Commercial Borrowings (ECB) Policy - Revised framework

Attention of Authorised Dealer Category - I (AD Cat I) banks is invited to A.P. (DIR Series) Circular No. 5 dated August 1, 2005 containing the basic framework under which eligible resident entities can raise External Commercial Borrowings (ECB). Subsequent to issuance of this circular, the ECB framework has been incrementally calibrated taking into account the emerging financing needs of the Indian entities and the macroeconomic developments, by bringing more resident entities as eligible borrowers, recognizing more entities as lenders, expanding end-uses, etc., besides periodically reviewing the All-in-Cost (AIC) for such borrowings. Special carve outs were also made to take care of sector specific needs.

2. As sufficient time has passed since the extant ECB framework was operationalised, a need was felt to undertake a review based on the experience gained in administering the ECB regime and the current financing ecosystem which, inter alia, allows issuance of Indian Rupee (INR) denominated bonds overseas by a wide set of borrowers. Accordingly, a draft of the proposed ECB framework was placed in the public domain on September 23, 2015 for wider consultation. Based on the responses received and, in consultation with the Government of India, a revised ECB framework based on the following overarching principles has been finalised:

i. A more liberal approach, with fewer restrictions on end uses, higher all-in-cost ceiling, etc. for long term foreign currency borrowings as the extended term makes repayments more sustainable and also minimizes roll-over risks for the borrower;