No.CLE/Pol/Circular/2011
Sept 12, 2011

Dear Members,

SUB : External Commercial Borrowings – Simplification of Procedure

Reserve Bank of India has issued a Circular No.11, dt.7th Sept 2011 simplifying the procedure for change of the existing lending financial institution to a new lender.

As per the existing ECB procedure, if any of the ECB borrower wishes to change the existing lender, the banks refer to the Reserve Bank of India for necessary approval. Now vide the issue of the above circular, henceforth the request may not be referred to RBI instead can be approved by the banks themselves.

The ECB finance is provided by an international bank or a multilateral financial institution (such as IFC, ADB, CDC, etc.) or a regional financial institution or a Government owned development financial institution or an export credit agency or supplier of equipment. Banks are advised to approve the request for change of the lender to a new lender only if the new lender also belongs to any one of the above mentioned categories and subject to the following conditions.

i) the new lender is a recognized lender as per the extant ECB norms;

ii) there is no change in the other terms and conditions of the ECB; and

iii) the ECB is in compliance with the extant guidelines

The above modifications 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 company per financial year under the automatic route, eligible borrower, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.

Members may kindly take note of the above simplification of procedure in respect of ECB finance. A copy of the Circular No.11, dt.7th Sept 2011 is enclosed herewith for reference.

With regards

Ali Ahmed Khan
Executive Director
COUNCIL FOR LEATHER EXPORTS