RBI/2011-12/539
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A. P. (DIR Series)
Circular No.119
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May
7, 2012
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To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy -
Utilization of ECB proceeds for Rupee expenditure
Attention of Authorized 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. 52 dated November
23, 2011 relating to External Commercial Borrowings.
2.
As per the extant guidelines, ECB proceeds
can be utilized for permissible foreign currency expenditure and Rupee
expenditure. On a review, it has been decided that at the time of availing Loan
Registration Number (LRN) from the Reserve Bank, borrowers should provide
bifurcation of the utilization of the ECB proceeds towards foreign currency and
Rupee expenditure in Form-83.
3.
The primary
responsibility to ensure
that the ECB
proceeds meant for
Rupee
expenditure in India are repatriated to India for credit to their Rupee
accounts with AD Category- I banks in India as per A.P. (DIR Series) Circular
No.
52 dated
November 23, 2011 is that of the borrower concerned and any contravention of
the ECB guidelines will be viewed seriously and will invite penal action under
the Foreign Exchange Management Act (FEMA), 1999. The designated AD bank is
also required to ensure that the ECB proceeds meant for
Rupee expenditure are
repatriated to India immediately after drawdown.
4.
The modifications to the ECB policy will come
into force with immediate effect and subject to review. All other aspects of
the ECB policy shall remain unchanged.
5.
AD Category - I banks may bring the contents
of this circular to the notice of their constituents and customers.
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 are
without prejudice to permissions / approvals, if any, required under any other
law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager
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