What changed
Previously, any change in ECB terms after obtaining the Loan Registration Number required prior RBI approval. Now, AD Category-I banks can approve changes in drawdown/repayment schedules (provided average maturity is maintained), currency of borrowing (if freely convertible), change of AD bank (with NOC from existing bank), and borrower name changes (with RoC documents). Elongation/rollover beyond original maturity still needs RBI approval.
What it means for you
This delegation simplifies ECB administration for borrowers and reduces RBI's direct involvement in routine modifications. Banks must ensure compliance with conditions like maintaining average maturity and reporting changes to DSIM in Form 83. The USD 500 million automatic route limit, end-use, all-in-cost ceiling, and other ECB policy aspects remain unchanged.
What you must do
- Update internal ECB processing guidelines to handle delegated approvals for drawdown/repayment schedule changes, currency changes, AD bank changes, and borrower name changes.
- Ensure borrowers maintain the declared average maturity period when approving schedule changes and report promptly to DSIM via Form 83.
- Verify that any new currency of borrowing is freely convertible and that all other ECB terms remain unchanged.
- Require a No-Objection Certificate from the existing AD bank before approving a change of AD bank.
- Check supporting documents from the Registrar of Companies for borrower name changes.
Who it affects
AD Category-I banks handling ECB transactions, ECB borrowers seeking modifications to loan terms, RBI's DSIM department receiving Form 83 reports
Can AD banks approve elongation of ECB repayment beyond original maturity?
No, any elongation or rollover in repayment on expiry of the original maturity still requires prior RBI approval. Only changes within the original maturity period, maintaining the average maturity, are delegated.
What conditions apply for changing the currency of borrowing?
The designated AD bank must ensure the proposed currency is freely convertible, and all other terms and conditions of the ECB remain unchanged.
Do the USD 500 million automatic route limits change with this circular?
No, all other aspects of ECB policy, including the USD 500 million limit per company per financial year under the automatic route, remain unchanged.