RBI ECB Guidelines

Date : Aug 01 2005
External Commercial Borrowings (ECB)
A.P. (DIR Series) Circular No. 5
All banks authorised to deal in foreign exchange
Attention of Authorised Dealers is invited to the A.P. (DIR Series) Circular No.40 dated April 25, 2005 and A.P. (DIR Series) Circular
No.60 dated January 31, 2004 in connection with External Commercial Borrowings (ECB). A review of the ECB guidelines has been
undertaken keeping in view the current macroeconomic situation, the experience gained so far by the Reserve Bank in administering
the ECB policy and requests received from certain sectors.
2. Accordingly, it has been decided to liberalise/modify the ECB policy as indicated below:
i) ECB with minimum average maturity of 5 years by non-banking financial companies (NBFCs) from multilateral financial
institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of
infrastructure equipment for leasing to infrastructure projects would be considered by the Reserve Bank under the Approval Route;
ii) Foreign Currency Convertible Bonds (FCCB) by housing finance companies satisfying specific criteria would be considered by the
Reserve Bank under the Approval Route;
iii) Minimum holding of equity by the foreign equity holder in the borrower’s company (which would qualify the foreign equity holder
as a recognised lender for ECB) has been clarified;
iv) Prepayment of ECB up to USD 200 million (as against the existing limit up to USD 100 million) may be allowed by Authorised
Dealers without prior approval of RBI subject to compliance of applicable minimum average maturity period for the loan. Pre-
payment of ECB for amounts exceeding USD 200 million would be considered by the Reserve Bank under the Approval Route.
v) Currently, domestic rupee denominated structured obligations are permitted by the Government of India to be credit enhanced by
international banks/international financial institutions/joint venture partners. Such applications would henceforth be considered by
the Reserve Bank under the Approval Route.
3. The amended ECB policy will come into force with immediate effect and is subject to review.
4. Comprehensive and revised ECB guidelines are set out in the Annex to this circular.
5. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000
dated May 3, 2000 are being issued separately.
6. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents and customers.
7. The direction contained in this circular has been issued under sections 10(4) and 11(1) of the Foreign Exchange Management
Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.
Chief General Manager
Annex toA.P. (DIR Series) Circular No. 5 dated August 1, 2005
1. ECB refer to commercial loans [in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments (e.g. floating
rate notes and fixed rate bonds)] availed from non-resident lenders with minimum average maturity of 3 years. ECB can be
accessed under two routes, viz., (i) Automatic Route outlined in paragraph 1(A) and (ii) Approval Route indicated in paragraph 1(B).
(A) AUTOMATIC ROUTE
Under the extant policy, ECB for investment in real sector -industrial sector, especially infrastructure sector-in India, are under
Automatic Route, i.e. do not require RBI/Government approval. In case of doubt as regards eligibility to access Automatic Route,
applicants may take recourse to the Approval Route.
i. Eligible borrowers
(a) Corporates registered under the Companies Act except financial intermediaries (such as banks, financial institutions (FIs),
housing finance companies and NBFCs) are eligible. Individuals, Trusts and Non-Profit making Organisations are not eligible to
(b) Non-Government Organisations (NGOs) engaged in micro finance activities are eligible to avail ECB. Such NGO (i) should have
a satisfactory borrowing relationship for at least 3 years with a scheduled commercial bank authorised to deal in foreign exchange
and (ii) would require a certificate of due diligence on `fit and proper’ status of the board/committee of management of the borrowing
entity from the designated Authorised Dealer (AD).
ii. Recognised Lenders
(a) Borrowers can raise ECB from internationally recognised sources such as (i) international banks, (ii) international capital
markets, (iii) multilateral financial institutions (such as IFC, ADB, CDC etc.,), (iv) export credit agencies, (v) suppliers of equipment,
(vi) foreign collaborators and (vii) foreign equity holders. Furthermore, overseas organisations and individuals complying with
following safeguards may provide ECB to NGOs engaged in micro finance activities.
Overseas organisations planning to extend ECB would have to furnish a certificate of due diligence from an overseas bank
which in turn is subject to regulation of host-country regulator and adheres to Financial Action Task Force (FATF) guidelines to the
designated AD. The certificate of due diligence should comprise the following (i) that the lender maintains an account with the bank
for at least a period of two years, (ii) that the lending entity is organised as per the local law and held in good esteem by the
business/local community and (iii) that there is no criminal action pending against it.
Individual Lender has to obtain a certificate of due diligence from an overseas bank indicating that the lender maintains an
account with the bank for at least a period of two years. Other evidence /documents such as audited statement of account and
income tax return which the overseas lender may furnish need to be certified and forwarded by the overseas bank. Individual
lenders from countries wherein banks are not required to adhere to Know Your Customer (KYC) guidelines are not permitted to
(d) The key operative part in the credential of the overseas lender is that ECB should be availed from an internationally recognised
source and one of the recognized categories is 'foreign equity holder' as indicated above. It is clarified that for a 'foreign equity
holder' to be eligible as 'recognized lender' under the automatic route would require minimum holding of equity in the borrower’s
company as under:
(d. i) ECB up to USD 5 million – minimum equity of 25 per cent held directly by the lender,
(d. ii) ECB more than USD 5 million – minimum equity of 25 per cent held directly by the lender and debt-equity ratio not exceeding
4:1(i.e. the proposed ECB not exceeding four times the direct foreign equity holding).
iii. Amount and Maturity
a) ECB up to USD 20 million or equivalent with minimum average maturity of three years
b) ECB above USD 20 million and up to USD 500 million or equivalent with minimum average maturity of five years
c) The maximum amount of ECB which can be raised by a corporate is USD 500 million during a financial year.
d) NGOs engaged in micro finance activities can raise ECB up to USD 5 million during a financial year.
e) ECB up to USD 20 million can have call/put option provided the minimum average maturity of 3 years is complied before
exercising call/put option.
iv. All-in-cost ceilings
All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees
payable in Indian Rupees. Moreover, the payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost.
The all-in-cost ceilings for ECB are indicated from time to time. The following ceilings are valid till reviewed.
Average Maturity Period All-in-cost Ceilings over 6 month LIBOR*

Three years and up to five years 200 basis points
More than five years 350 basis points
* for the respective currency of borrowing or applicable benchmark.
a) ECB can be raised only for investment (such as import of capital goods, new projects, modernization/expansion of existing
production units) in real sector - industrial sector including small and medium enterprises (SME) and infrastructure sector - in India.
Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) ports, (vi) industrial
parks and (vii) urban infrastructure (water supply, sanitation and sewage projects);
b) ECB proceeds can be utilised for overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS) subjectto
the existing guidelines on Indian Direct Investment in JV/WOS abroad.
c) Utilisation of ECB proceeds is permitted in the first stage acquisition of shares in the disinvestment process and also in the
mandatory second stage offer to the public under the Government’s disinvestment programme of PSU shares.
d) NGOs engaged in micro finance activities may utilise ECB proceeds for lending to self-help groups or for micro-credit or for
bonafide micro finance activity including capacity building.
e) Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market or acquiring a company (or a part
thereof) in India by a corporate.
f) Utilisation of ECB proceeds is not permitted in real estate. The term ‘real estate’ excludes development of integrated township as
defined by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, SIA (FC Division), Press Note 3
(2002 Series, dated 04.01.2002).
g) End-uses of ECB for working capital, general corporate purpose and repayment of existing Rupee loans are not permitted.
Issuance of guarantee, standby letter of credit, letter of undertaking or letter of comfort by banks, financial institutions and NBFCs
relating to ECB is not permitted.
The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immovable
assets and financial securities, such as shares, in favour of overseas lender is subject to Regulation 8 of Notification No. FEMA
21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000, dated May 3, 2000, as amended from time
to time, respectively.
viii. Parking of ECB proceeds overseas
ECB proceeds should be parked overseas until actual requirement in India. It is clarified that ECB proceeds parked overseas can be
invested in the following liquid assets (a) deposits or Certificate of Deposit or other products offered by banks rated not less than
AA(-) by Standard and Poor/Fitch IBCA or Aa3 by Moody’s; (b) deposits with overseas branch of an authorised dealer in India; and
Treasury bills and other monetary instruments of one year maturity having minimum rating as indicated above. The funds should
be invested in such a way that the investments can be liquidated as and when funds are required by the borrower in India.
ix. Prepayment
Prepayment of ECB up to USD 200 million may be allowed by ADs without prior approval of RBI subject to compliance with the
stipulated minimum average maturity period as applicable to the loan.
x. Refinance of existing ECB
Refinancing of existing ECB by raising fresh ECB at lower cost is permitted subject to the condition that the outstanding maturity of
the original loan is maintained.
xi. Debt Servicing
The designated Authorised Dealer (AD) has the general permission to make remittances of instalments of principal, interest and
other charges in conformity with ECB guidelines issued by Government / RBI from time to time.
Borrower may enter into loan agreement complying with ECB guidelines with recognised lender for raising ECB under Automatic
Route without prior approval of RBI. The borrower may note to comply with the reporting arrangement under paragraph 1(C)(i). The
primary responsibility to ensure that ECB raised/utilised are in conformity with the ECB guidelines and the Reserve Bank
regulations/directions/circulars is that of the concerned borrower and any contravention of the ECB guidelines will be viewed
seriously and may invite penal action. The designated AD is also required to ensure that raising/utilisation of ECB is in compliance
with ECB guidelines at the time of certification.
(B) APPROVAL ROUTE
The following types of proposals for ECB are covered under the Approval Route.
i. Eligible borrowers
a) Financial institutions dealing exclusively with infrastructure or export finance such as IDFC, IL&FS, Power Finance Corporation,
Power Trading Corporation, IRCON and EXIM Bank are considered on a case by case basis.
b) Banks and financial institutions which had participated in the textile or steel sector restructuring package as approved by the
Government are also permitted to the extent of their investment in the package and assessment by RBI based on prudential norms.
Any ECB availed for this purpose so far are deducted from their entitlement.
c) Cases falling outside the purview of the automatic route limits and maturity period indicated at paragraphs 1A(iii) (a) and 1A(iii)
d) ECB with minimum average maturity of 5 years by non-banking financial companies (NBFCs) from multilateral financial
institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of
infrastructure equipment for leasing to infrastructure projects.
e) Foreign Currency Convertible Bonds (FCCB) by housing finance companies satisfying the following minimum criteria: (i) the
minimum net worth of the financial intermediary during the previous three years shall not be less than Rs. 500 crore, (ii) a listing on
the BSE or NSE, (iii) minimum size of FCCB is USD 100 million, (iv) the applicant should submit the purpose / plan of utilization of
ii. Recognised Lenders
(a) Borrowers can raise ECB from internationally recognised sources such as (i) international banks, (ii) international capital
markets, (iii) multilateral financial institutions (such as IFC, ADB, CDC etc.,), (iv) export credit agencies, (v) suppliers of equipment,
(vi) foreign collaborators and (vii) foreign equity holders.
(b) From 'foreign equity holder', where the minimum equity held directly by the foreign equity lender is 25 per cent but debt-equity
ratio exceeds 4:1(i.e. the proposed ECB exceeds four times the direct foreign equity holding).
iii. All-in-cost ceilings
All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees
payable in Indian Rupees. Moreover, the payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The
all-in-cost ceilings for ECB are indicated from time to time. The following ceilings are valid till reviewed.
Average Maturity Period All-in-cost Ceilings over 6 month LIBOR*

Three years and up to five years 200 basis points
More than five years 350 basis points
a) ECB can be raised only for investment (such as import of capital goods, new projects, modernization/expansion of existing
production units) in real sector-industrial sector including small and medium enterprises (SME) and infrastructure sector-in India.
Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) ports, (vi) industrial
parks and (vii) urban infrastructure (water supply, sanitation and sewage projects);
b) ECB proceeds can be utilised for overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS) subjectto
the existing guidelines on Indian Direct Investment in JV/WOS abroad.
c) Utilisation of ECB proceeds is permitted in the first stage acquisition of shares in the disinvestment process and also in the
mandatory second stage offer to the public under the Government’s disinvestment programme of PSU shares.
d) Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market or acquiring a company (or a part
thereof) in India by a corporate except for banks and financial institutions eligible under paragraph 1B(i)(a) and 1B(i)(b).
e) Utilisation of ECB proceeds in real estate is not permitted. The term ‘real estate’ excludes development of integrated township as
defined by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, SIA (FC Division), Press Note 3
(2002 Series, dated 04.01.2002).
f) End-uses of ECB for working capital, general corporate purpose and repayment of existing Rupee loans are not permitted.
Issuance of guarantee, standby letter of credit, letter of undertaking or letter of comfort by banks, financial institutions and NBFCs
relating to ECB is not normally permitted. Applications for providing guarantee/standby letter of credit or letter of comfort by banks,
financial institutions relating to ECB in the case of SME will be considered on merit subject to prudential norms.
The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immovable
assets and financial securities, such as shares, in favour of overseas lender is subject to Regulation 8 of Notification No. FEMA
21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000, dated May 3, 2000, as amended from time
to time, respectively.
vii. Parking of ECB proceeds overseas
ECB proceeds should be parked overseas until actual requirement in India. It is clarified that ECB proceeds parked overseas can be
invested in the following liquid assets (a) deposits or Certificate of Deposit or other products offered by banks rated not less than
AA(-) by Standard and Poor/Fitch IBCA or Aa3 by Moody’s; (b) deposits with overseas branch of an authorised dealer in India; and
Treasury bills and other monetary instruments of one year maturity having minimum rating as indicated above. The funds should
be invested in such a way that the investments can be liquidated as and when funds are required by the borrower in India.
viii. Prepayment
(a) Prepayment of ECB up to USD 200 million may be allowed by ADs without prior approval of RBI subject to compliance with the
stipulated minimum average maturity period as applicable to the loan.
(b) Pre-payment of ECB for amounts exceeding USD 200 million would be considered by the Reserve Bank under the Approval
ix. Refinance of existing ECB
Refinancing of outstanding ECB by raising fresh ECB at lower cost is permitted subject to the condition that the outstanding maturity
of the original loan is maintained.
x. Debt Servicing
The designated AD has the general permission to make remittances of instalments of principal, interest and other charges in
conformity with ECB guidelines issued by Government / RBI from time to time.
Applicants are required to submit an application in form ECB through designated AD to the Chief General Manager, Foreign
Exchange Department, Reserve Bank of India, Central Office, External Commercial Borrowings Division, Mumbai – 400 001 along
with necessary documents.
xii. Empowered Committee
RBI has set up an Empowered Committee to consider proposals coming under the approval route.
C. REPORTING ARRANGEMENTS AND DISSEMINATION OF INFORMATION
i. Reporting Arrangements
a) With a view to simplify the procedure, submission of copy of loan agreement is dispensed with.
b) Borrowers are required to submit Form 83, in duplicate, certified by the Company Secretary (CS) or Chartered Accountant (CA) to
the designated AD. One copy is to be forwarded by the designated AD to the Director, Balance of Payments Statistics Division,
Department of Statistical Analysis and Computer Services (DESACS), Reserve Bank of India, Bandra-Kurla Complex, Mumbai –
400 051 for allotment of loan registration number.
c) The borrower can draw-down the loan only after obtaining the loan registration number from DESACS, RBI.
d) Borrowers are required to submit ECB-2 Return certified by the designated AD on monthly basis so as to reach DESACS, RBI
within seven working days from the close of month to which it relates.
ii. Dissemination of Information
For providing greater transparency, information with regard to the name of the borrower, amount, purpose and maturity of ECB
under both Automatic Route and Approval Route are put on the RBI website on a monthly basis with a lag of one month to which it
2. Foreign Currency Convertible Bonds (FCCB)
The policy for ECB is also applicable to FCCB in all respects.
3. Structured Obligations
In order to enable corporates to raise resources domestically and hedge exchange rate risks, domestic rupee denominated
structured obligations are permitted by the Government to be credit enhanced by international banks / international financial
institutions/joint venture partners. Such applications would henceforth be considered by the Reserve Bank under the Approval
Top
Date : May 21 2007 External Commercial Borrowings (ECB) – End-use and All-in-
cost ceilings - Revised
RBI/2006-2007/409
A. P. (DIR Series) Circular No. 60
May 21, 2007
To
All Category – I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) –

End-use and All-in-cost ceilings - Revised
Attention of Authorised Dealers Category - I (AD Category – I) banks is invited to the A. P. (DIR
Series) Circular No.5 dated August 1, 2005 on External Commercial Borrowings (ECB). A review
of the ECB guidelines has been undertaken keeping in view the current macroeconomic situation
and the experience gained so far by the Reserve Bank in administering the ECB policy.
2. Based on the review, the ECB policy is modified as indicated below:
2. (a) End-use - As per the extant ECB policy, utilisation of ECB proceeds is not permitted in real
estate. The term ‘real estate’ excludes development of integrated township as defined by Press
Note 3 (2002 Series) dated January 4, 2002. It has now been decided to withdraw the exemption
accorded to the 'development of integrated township' as a permissible end-use of ECB.
Accordingly, utilisation of ECB proceeds is not permissible in real estate, without any exemption.
2. (b) All-in-cost ceilings - With the sovereign credit ratings of India enhanced to investment
grade, the all-in-cost ceilings for ECB are modified as follows:
Average Maturity Period All-in-Cost ceilings over
6 Months LIBOR*
Existing Revised
Three years and up to five years 200 basis points 150 basis points
More than five years 350 basis points 250 basis points
3. The above changes will apply to ECB both under the automatic route as well as approval route
with immediate effect and is subject to review.
4. Necessary amendments to Notification No. FEMA 3/2000-RB dated 3rd May 2000 [Foreign
Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000] are
being issued separately.
5. AD Category - I banks may bring the contents of this circular to the notice of their constituents
and customers concerned.
6. The directions contained in this circular have been issued under Section 10(4) and 11(1) of the
Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions /
approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Date : Aug 07 2007 Review of External Commercial Borrowings (ECB) Policy

RBI/2007-2008/112
August 7, 2007
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Review of External Commercial Borrowings (ECB) Policy
Attention of Authorised Dealer Category - I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.5 dated August 1,
2005 and A.P. (DIR Series) Circular No.60 dated May 21, 2007 relating to External Commercial Borrowings (ECB). A review of the
ECB guidelines has been undertaken keeping in view the current macroeconomic situation and the experience gained so far by
the Reserve Bank in administering the ECB policy.
2. Based on the review, it has been decided to modify the ECB policy until further review as indicated below:
(i) Henceforth, ECB more than USD 20 million per borrower company per financial year would be permitted only for foreign
currency expenditure for permissible end-uses of ECB. Accordingly, borrowers raising ECB more than USD 20 million shall park
the ECB proceeds overseas for use as foreign currency expenditures for permissible end-uses and shall not remit the funds to
India. The above modifications would be applicable to ECB exceeding USD 20 million per financial year both under the Automatic
Route and under the Approval Route.
(ii) ECB up to USD 20 million per borrowing company per financial year would be permitted for foreign currency expenditures for
permissible end-uses under the Automatic Route and these funds shall be parked overseas and not be remitted to India.
Borrowers proposing to avail ECB up to USD 20 million for Rupee expenditure for permissible end-uses would require prior
approval of the Reserve Bank under the Approval Route. However, such funds shall be continued to be parked overseas until
actual requirement in India.
(iii) All other aspects of ECB policy such as eligible borrower, USD 500 million limit per borrower company per financial year under
the Automatic route, recognised lender, average maturity period, all-in-cost-ceiling, prepayment, refinancing of existing ECB and
reporting arrangements remain unchanged.
(iv) These conditions will not apply to borrowers who have already entered into loan agreement and obtained loan registration
numbers from the Reserve Bank. Borrowers who have taken verifiable and effective steps wherein the loan agreement has been
entered into to avail of ECB under the previous dispensation, and not obtained the loan registration number, may apply to the
Reserve Bank through their Authorised Dealer.
3. The above changes will come into force with immediate effect.
5. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
6. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management
Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Date : May 29 2008 External Commercial Borrowings Policy: Liberalisation

RBI/2007-08/339
A.P.(DIR Series) Circular No.43
May 29, 2008

To
All Category-I Authorised Dealer Banks
Madam/Sir,
External Commercial Borrowings Policy: Liberalisation
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the A. P. (DIR Series) Circular No. 5 dated August 1,
2005, A. P. (DIR Series) Circular No. 60 dated May 21, 2007 and A. P. (DIR Series) Circular No. 4 dated August 7, 2007 relating
to External Commercial Borrowings (ECB).
2. Based on a review, it has been decided to modify some aspects of the ECB policy as indicated below:
(a) At present, borrowers proposing to avail ECB up to USD 20 million for Rupee expenditure for permissible end-uses require
prior approval of the Reserve Bank under the Approval Route. It has been decided that, henceforth,
(i) borrowers in infrastructure sector may avail ECB up to USD 100 million for Rupee expenditure for permissible end-uses under
the Approval Route;
(ii) in the case of other borrowers, the existing limit of USD 20 million for Rupee expenditure for permissible end-uses under the
Approval Route has been enhanced to USD 50 million.
(b) The all-in-cost ceilings in respect of ECB are modified as follows:
Average Maturity Period All-in-Cost ceilings over 6 Months LIBOR*

Existing Revised
Three years and up to five years 150 bps 200 bps
More than five years 250 bps 350 bps
s* for the respective currency of credit or applicable benchmark
The above changes will apply to ECB both under the automatic route and the approval route.
3. This amendment to ECB guidelines will come into force with immediate effect. All other aspects of ECB policy such as USD
500 million limit per company per year under the Automatic Route, eligible borrower, recognised lender, end-use of foreign
currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of
existing ECB and reporting arrangements remain unchanged.
5. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
6. The directions contained in this circular have been issued under sections 10(4) and 11 (1) of the Foreign Exchange
Management Act, 1999 (42 of 1999) and is without prejudice to permissions/approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge
Date : Sep 22 2008 External Commercial Borrowings Policy - Liberalisation
RBI/2008-09/ 190
September 22, 2008
To
All Category - I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings Policy - Liberalisation
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the A. P. (DIR Series) Circular No.5 dated August
1, 2005, A. P. (DIR Series) Circular No. 60 dated May 21, 2007,A. P. (DIR Series) Circular No. 4 dated August 7, 2007and A. P.
(DIR Series) Circular No. 43 dated May 29, 2008relating to External Commercial Borrowings (ECB).
(a) At present, borrowers in the infrastructure sector are allowed to avail ECB up to USD 100 million per financial year for Rupee
expenditure for permissible end-uses under the Approval Route. Considering the huge funding requirements of the sector,
particularly for meeting Rupee expenditure, the existing limit of USD 100 million has been raised to USD 500 million per financial
year for the borrowers in the infrastructure sector for Rupee expenditure under the Approval Route. ECBs in excess of USD 100
million for Rupee expenditure should have a minimum average maturity period of 7 years.
(b) In view of widening of credit spreads in the international financial markets, the all-in-cost ceilings for ECBs are modified as
follows:

6 Months LIBOR*
Existing Revised
More than five years and up to seven years 350 bps 350 bps
More than seven years 350 bps 450 bps
* for the respective currency of borrowing or applicable benchmark
3. The amendments to the ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy such as
USD 500 million limit per borrower per financial year under the Automatic Route, eligible borrower, recognised lender, end-use of
foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment,
refinancing of existing ECB and reporting arrangements remain unchanged. The existing limit of USD 50 million for Rupee
expenditure under the Approval Route for borrowers other than those in the infrastructure sector also remains unchanged.
Yours faithfully,
(Salim Gangadharan)
Date : Oct 08 2008 External Commercial Borrowings Policy - Liberalisation

RBI/2008-09/210
October 08, 2008
To
Madam / Sir,
External Commercial Borrowings Policy - Liberalisation
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the A. P. (DIR Series) Circular No.5 dated August
1, 2005, A. P. (DIR Series) Circular No. 4 dated August 7, 2007, A. P. (DIR Series) Circular No. 43 dated May 29, 2008 and A.P.
(DIR Series) No. 16 dated September 22, 2008 relating to External Commercial Borrowings (ECB).
2. As per the extant ECB policy, Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road
including bridges, (v) sea port and airport (vi) industrial parks and (vii) urban infrastructure (water supply, sanitation and sewage
projects).
3. On a review of the ECB policy and to promote the development of the mining, exploration and refinery sectors in the country, it
has been decided to expand the definition of Infrastructure sector for the purpose of availing of ECB. Accordingly, the
Infrastructure sector would henceforth be defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v)
sea port and airport (vi) industrial parks (vii) urban infrastructure (water supply, sanitation and sewage projects) and (viii) mining,
exploration and refining.
4. The expanded definition of Infrastructure sector for the purpose of ECB shall come into force with immediate effect. All other
aspects of the ECB policy such as USD 500 million limit per borrower, per financial year under the Automatic Route, eligible
borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments,
average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.
dated May 3, 2000 are being notified separately.
Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
Salim Gangadharan
Date: Oct 22, 2008 External Commercial Borrowings Policy: Liberalisation

RBI/2008-09/245
October 22 , 2008
To
Madam / Sirs,
External Commercial Borrowings Policy: Liberalisation
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the A. P. (DIR Series) Circular No.5 dated August 1,
2005, A. P. (DIR Series) Circular No. 60 dated May 21, 2007, A. P. (DIR Series) Circular No. 4 dated August 7. 2007 and A. P.
(DIR Series) Circular No. 43 dated May 29, 2008, A.P.(DIR Series) Circular No. 16 dated September 22, 2008 and A.P. (DIR
Series) Circular No. 20 dated October 8, 2008 relating to External Commercial Borrowings (ECB).
3. Henceforth, ECB up to USD 500 million per borrower per financial year would be permitted for Rupee expenditure and / or
foreign currency expenditure for permissible end - uses under the Automatic Route. Accordingly, the requirement of minimum
average maturity period of seven years for ECB more than USD 100 million for Rupee capital expenditure by the borrowers in the
infrastructure sector has been dispensed with.
4. In order to further develop the telecom sector in the country, payment for obtaining license/permit for 3G Spectrum will be
considered an eligible end - use for the purpose of ECB.
5. At present, ECB proceeds are required to be parked overseas until actual requirement in India and such proceeds can be
invested in the following liquid assets (a) deposits or certificate of deposit offered by banks rated not less than AA (-) by Standard
and Poor / Fitch IBCA or Aa3 by Moody’s; (b) deposits with overseas branch of an AD bank in India; and (c) Treasury bills and
other monetary instruments of one year maturity having minimum rating as indicated above. It has now been decided that
henceforth the borrowers will be extended the flexibility to either keep these funds off-shore as above or keep it with the overseas
branches / subsidiaries of Indian banks abroad or to remit these funds to India for credit to their Rupee accounts with AD Category
I banks in India, pending utilisation for permissible end-uses. However, as hitherto, the rupee funds will not be permitted to be
used for investment in capital markets, real estate or for inter-corporate lending.
6. In view of the tight liquidity conditions in the International financial markets, it has been decided to rationalize and enhance the
all-in-cost ceilings as under:
Average Maturity Period All-in-Cost ceilings over 6 Months LIBOR*

Existing Revised
More than five years and up to seven years 350 bps
500 bps
More than seven years 450 bps
The all-in-cost ceilings will be reviewed from time to time depending on the conditions in the international financial markets.
7. Keeping in view the risks associated with unhedged foreign exchange exposures of SMEs, a system of monitoring such
unhedged exposures by the banks on a regular basis is being put in place.
8. The amendments to the ECB guidelines will come into force with immediate effect. All other aspects of ECB policy such as
USD 500 million limit per company per financial year under the Automatic Route, eligible borrower, recognised lender, end-use,
average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.
10. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
Yours faithfully,
(Salim Gangadharan)
To obtain an aligned printout please download the (12 kb) version to your machine and
then use respective software to print the story. Date:

Jan 02, 2009 External Commercial Borrowings (ECB) Policy - Liberalisation
RBI/2008-09/343
January 2, 2009
To
Madam / Sir,
External Commercial Borrowings (ECB) Policy - Liberalisation
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the A.P. (DIR Series) Circular No. 26 dated
October 22, 2008 relating to External Commercial Borrowings (ECB).
2. On a review, it has been decided to modify some aspects of the ECB policy as indicated below :
(i) As per extant ECB policy, the all-in-cost ceilings for ECBs, in respect of both Automatic as well as Approval routes are as
under:

6 Months LIBOR*
Three years and up to five years 300 bps
More than five years 500 bps
It has now been decided to dispense with the requirement of all-in-cost ceilings on ECB until June 30, 2009. Accordingly, eligible
borrowers, proposing to avail of ECB beyond the permissible all-in-cost ceilings specified above may approach the Reserve Bank
under the Approval Route. This relaxation in all-in-cost ceiling will be reviewed in June 2009.
(ii) In May, 2007, Reserve Bank had withdrawn the exemption accorded to the 'development of integrated township' as a
permissible end-use of ECB. It has now been decided to permit corporates, engaged in the development of integrated township,
as defined in Press Note 3 (2002 Series) dated January 04, 2002, issued by DIPP, Ministry of Commerce & Industry, Government
of India to avail of ECB under the Approval Route. Integrated township, as defined above, includes housing, commercial premises,
hotels, resorts, city and regional level urban infrastructure facilities such as roads and bridges, mass rapid transit systems and
manufacture of building materials. Development of land and providing allied infrastructure forms an integrated part of township’s
development. The minimum area to be developed should be 100 acres for which norms and standards are to be followed as per
local bye-laws / rules. In the absence of such bye-laws/rules, a minimum of two thousand dwelling units for about ten thousand
population will need to be developed. The policy will be reviewed in June 2009.
(iii) As per the extant ECB policy, Non-Banking Financial Companies (NBFCs) are permitted to avail of ECB for a minimum
average maturity period of five years to finance import of infrastructure equipments for leasing to infrastructure projects in India. It
has now been decided to allow NBFCs, which are exclusively involved in financing of the infrastructure sector, to avail of ECBs
from multilateral / regional financial institutions and Government owned development financial institutions for on-lending to the
borrowers in the infrastructure sector under the Approval route. While considering the applications, Reserve Bank will take into
account the aggregate commitment of these lenders directly to infrastructure projects in India. The direct lending portfolio of the
above lenders vis-à-vis their total ECB lending to NBFCs, at any point of time should not be less than 3:1. AD Category - I banks
should obtain a certificate from the eligible lenders to this effect. This facility will be reviewed in June 2009.
(iv) At present, entities in the services sector viz. Hotels, Hospitals and Software sector are allowed to avail of ECB up to USD 100
million per financial year for import of capital goods, under the Approval route. It has now been decided to permit the corporates in
the Hotels, Hospitals and Software sectors to avail of ECB up to USD 100 million per financial year, under the Automatic Route,
for foreign currency and / or Rupee capital expenditure for permissible end-use. The proceeds of the ECBs should not be used for
acquisition of land.
3. The modifications to the ECB guidelines will come into force with immediate effect. All other aspects of ECB policy, such as
USD 500 million limit per company per financial year under the Automatic Route, eligible borrower, recognised lender, end-use,
all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain
unchanged.
Yours faithfully,
(D. Mishra)
RBI/2008-09/460

April 28, 2009
To

Madam / Sir,
External Commercial Borrowings (ECB) Policy - Liberalisation
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the

A.P. (DIR Series) Circular No. 46 dated January 2, 2009 relating to External Commercial
Borrowings (ECB) and in terms of Para 2 of the circular, it was decided to dispense with
the requirement of all-in-cost ceilings on ECB, under the approval route, until June 30,
2009. Accordingly, eligible borrowers, proposing to avail of ECB beyond the prescribed
all-in-cost ceilings could approach the Reserve Bank, under the approval route.
2. As announced in Para 107 of the Annual Policy Statement 2009-10 and considering the
continuing pressure on credit spreads in the international markets, it has been decided to
extend the relaxation in all–in-cost ceilings, under the approval route, until December
31, 2009. This relaxation will be reviewed in December 2009.
3. The modifications to the ECB guidelines shall come into force with immediate effect.
All other aspects of ECB policy, such as USD 500 million limit per company per
financial year under the Automatic Route, eligible borrower, recognised lender, end-use,
average maturity period, prepayment, refinancing of existing ECB and reporting
arrangements remain unchanged.
4. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending

in Foreign Exchange) Regulations, 2000 dated May 3, 2000 are being issued separately.
5. AD Category - I banks may bring the contents of this circular to the notice of their
constituents and customers concerned.
6.The directions contained in this circular have been issued under sections 10(4) and 11
(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions/approvals, if any, required under any other law.
Yours faithfully
Date: Apr
Buyback / Prepayment of Foreign Currency Convertible Bonds (FCCBs)
RBI/2008-09/461
A. P. (DIR Series) Circular No 65
April
To,
Madam / Sir,
Buyback / Prepayment of Foreign Currency Convertible Bonds (FCCBs)
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to A.P.(DIR Series) Circular No.
December 8, 2008 and A.P. (DIR Series) Circular No. 58 dated March 13, 2009 on the captioned subject. In terms of
of A.P (DIR Series) Circular No. 39 dated December 8, 2008, Reserve Bank has been considering proposals fro
companies for buyback of FCCBs out of their internal accruals, under the approval route up to a total amount of USD
of the redemption value per company, subject to a minimum discount of 25 per cent on the book value.
2. As announced in Para 110 of the Annual Policy Statement 2009-10 and keeping in view the benefits accruing to t
companies, the current policy has been reviewed and it has been decided to increase the total amount of permissible
of FCCBs, out of internal accruals, from USD 50 million of the redemption value per company to USD 100 million,
approval route by linking the higher amount of buyback to larger discounts. Accordingly, Indian companies may henc
permitted to buyback FCCBs up to USD 100 million of the redemption value per company, out of internal accruals
prior approval of the Reserve Bank, subject to a:
i) minimum discount of 25 per cent of book value for redemption value up to USD 50
ii) minimum discount of 35 per cent of book value for the redemption value over USD 50 million and up to USD 75 m
iii) minimum discount of 50 per cent of book value for the redemption value of USD 75 million and up to USD 100 milli
3. All other terms and conditions stipulated in A.P. (DIR Series) Circular No. 39 dated December 8, 2008 will conti
applicable. This facility shall come into force with immediate effect and the entire procedure of buyback should be c
by December 31, 2009 as specified in A.P. (DIR Series) Circular No. 58 dated March 13
4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers co
5. The directions contained in this circular have been issued under sections 10(4) and 11 (1) of the Foreign E
Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any oth
Yours
(Salim Gang
Chief General Manager –in

RBI ECB Guidelines

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RBI ECB Guidelines

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Date : Aug 01 2005

External Commercial Borrowings (ECB)

A.P. (DIR Series) Circular No. 5

All banks authorised to deal in foreign exchange

External Commercial Borrowings (ECB)

Chief General Manager

Annex toA.P. (DIR Series) Circular No. 5 dated August 1, 2005

External Commercial Borrowings (ECB)

(A) AUTOMATIC ROUTE

ii. Recognised Lenders

iii. Amount and Maturity

iv. All-in-cost ceilings

Average Maturity Period All-in-cost Ceilings over 6 month LIBOR*

* for the respective currency of borrowing or applicable benchmark.

viii. Parking of ECB proceeds overseas

x. Refinance of existing ECB

xi. Debt Servicing

(B) APPROVAL ROUTE

ii. Recognised Lenders

iii. All-in-cost ceilings

Average Maturity Period All-in-cost Ceilings over 6 month LIBOR*

* for the respective currency of borrowing or applicable benchmark.

vii. Parking of ECB proceeds overseas

ix. Refinance of existing ECB

xii. Empowered Committee

C. REPORTING ARRANGEMENTS AND DISSEMINATION OF INFORMATION

ii. Dissemination of Information

The policy for ECB is also applicable to FCCB in all respects.

May 21, 2007

All Category – I Authorised Dealer Banks

External Commercial Borrowings (ECB) –

2. Based on the review, the ECB policy is modified as indicated below:

Date : Aug 07 2007 Review of External Commercial Borrowings (ECB) Policy

All Category – I Authorised Dealer Banks

Review of External Commercial Borrowings (ECB) Policy

Date : May 29 2008 External Commercial Borrowings Policy: Liberalisation

May 29, 2008

All Category-I Authorised Dealer Banks

External Commercial Borrowings Policy: Liberalisation

(b) The all-in-cost ceilings in respect of ECB are modified as follows:

Average Maturity Period All-in-Cost ceilings over 6 Months LIBOR*

September 22, 2008

All Category - I Authorised Dealer Banks

Average Maturity Period All-in-Cost ceilings over

Date : Oct 08 2008 External Commercial Borrowings Policy - Liberalisation

October 08, 2008

All Category - I Authorised Dealer Banks

External Commercial Borrowings Policy - Liberalisation

Date: Oct 22, 2008 External Commercial Borrowings Policy: Liberalisation

All Category-I Authorised Dealer Banks

External Commercial Borrowings Policy: Liberalisation

Average Maturity Period All-in-Cost ceilings over 6 Months LIBOR*

* for the respective currency of borrowing or applicable benchmark.

then use respective software to print the story. Date:

All Category-I Authorised Dealer Banks

External Commercial Borrowings (ECB) Policy - Liberalisation

Average Maturity Period All-in-Cost ceilings over

A.P. (DIR Series) Circular No. 64

All Category-I Authorised Dealer Banks

External Commercial Borrowings (ECB) Policy - Liberalisation

Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the

4. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending

All Category - I Authorised Dealer Banks