What changed
The earlier scheme allowing FCCB buybacks under both automatic and approval routes expired on December 31, 2009. Now, RBI will consider fresh applications only under the approval route until June 30, 2010, in response to representations from issuers.
What it means for you
Banks and their corporate clients can now seek RBI approval for FCCB buybacks, but only through the approval route—no automatic clearance. This provides a limited window for companies to manage their foreign currency liabilities, but requires strict adherence to earlier conditions and documentation.
What you must do
- Inform corporate clients about the reopened approval route for FCCB buybacks until June 30, 2010.
- Ensure all buyback applications comply with conditions from A.P. (DIR Series) Circular No. 39 dated Dec 8, 2008 and No. 65 dated Apr 28, 2009.
- Submit complete applications with supporting documents to RBI's Foreign Exchange Department, ECB Division, Mumbai.
- Advise clients that the automatic route is no longer available; only approval route applications will be considered.
Who it affects
AD Category-I banks, Indian companies that issued FCCBs, Corporate treasuries managing foreign currency debt
Can we still use the automatic route for FCCB buyback?
No, the automatic route was discontinued from January 1, 2010. Only the approval route is available until June 30, 2010.
What documents are needed for the approval route application?
The circular does not list specific documents, but you must comply with all terms and conditions from the referenced earlier circulars (No. 39/2008 and No. 65/2009) and submit supporting documents through your AD Category-I bank.
Where should we send the application?
Submit it through your designated AD Category-I bank to the Chief General Manager-in-Charge, RBI, Foreign Exchange Department, ECB Division, Central Office, Mumbai.