External Commercial Borrowings Approved Route

Approval Route

Application in Form ECB to be filed with the RBI, with

(i) A copy of offer letter from the overseas lender/supplier furnishing complete details of the terms and conditions of proposed ECB; and

(ii) A copy of the import contract, proforma/commercial invoice/bill of lading.

Monthly return

Borrowers are required to submit ECB-2 Return certified by the designated AD on monthly basis so as to reach DSIM, RBI within seven working days from the close of month to which it relates.

Conversion of ECBs to equity

1.   ECBs can be converted to equity subject to conditions prescribed in this behalf in the ECB guidelines. The equity shares must be valued as per the guidelines/regulations issued by SEBI/ Controller of Capital Issues in case of listed/unlisted

2.   Conversion of ECB may be reported to the Reserve Bank as follows:

(a)  Borrowers are required to report full conversion of outstanding ECB into equity in the Form FC-GPR to the concerned Regional Office of the Reserve Bank as well as in Form ECB-2 submitted to the DSIM, RBI within seven working days from the close of month to which it relates. The words "ECB wholly converted to equity" should be clearly indicated on top of the Form ECB-2. Once reported, filing of ECB-2 in the subsequent months is not necessary.

(b) In case of partial conversion of outstanding ECB into equity, borrowers are required to report the converted portion in Form FC-GPR to the concerned Regional Office as well as in Form ECB-2 clearly differentiating the converted portion from the unconverted portion. The words "ECB partially converted to equity" should be indicated on top of the Form ECB-2. In subsequent months, the outstanding portion of ECB should be reported in Form ECB-2 to DSIM.

1.   The policy for ECB is also applicable to FCCB in all respects including reporting requirements. Further FCCBs issue must be in compliance with the guidelines prescribed in the Regulation 21 FEMA 120/2004-RB dated July 7, 2004 and the Schedule 1 there under. The issue size of the FCCBs cannot exceed USD 500 million as per the present policy. Issues exceeding USD 500 million would require prior approval of the Reserve Bank of India.

2.   The primary responsibility to ensure that ECB raised / utilised are in conformity with the ECB guidelines and the Reserve Bank regulations / directions is that of the borrower concerned and any contravention of the ECB guidelines will be viewed seriously and will invite penal action under FEMA 1999 (cf. A. P. (DIR Series) Circular No. 31 dated February 1, 2005). The designated AD bank is also required to ensure that raising / utilisation of ECB is in compliance with ECB guidelines at the time of certification.

Any changes in the terms and conditions of the ECB after obtaining LRN is required to be reported to designated AD Category-I banks to approve the same. Following requests from the ECB borrowers, subject to specified conditions:

·         Changes/modifications in the drawdown/repayment schedule Designated AD Category-I banks may 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. The changes in the drawdown/repayment schedule should be promptly reported to the DSIM, RBI in Form 83. However, any elongation/rollover in the repayment on expiry of the original maturity of the ECB would require the prior approval of the Reserve Bank.

·         Changes in the currency of borrowing Designated AD Category-I banks may allow changes in the currency of borrowing, if so desired, by the borrower company, in respect of ECBs availed of both under the automatic and the approval routes, subject to all other terms and conditions of the ECB remaining unchanged. Designated AD banks should, however, ensure that the proposed currency of borrowing is freely convertible.

·         Change of the AD bank Designated AD Category-I banks may allow change of the existing designated AD bank by the borrower company for effecting its transactions pertaining to the ECBs subject to No-Objection Certificate (NOC) from the existing designated AD bank and after due diligence.

·         Changes in the name of the Borrower Company Designated AD Category-I banks may allow changes in the name of the borrower company subject to production of supporting documents evidencing the change in the name from the Registrar of Companies.