What changed
The all-in-cost ceiling for ECB, previously set in March 2012, will remain in force until March 31, 2013. No other ECB policy aspects have been altered. The extension is effective immediately and subject to future review.
What it means for you
Banks and borrowers can continue using the same cost limits for ECB without any new restrictions or relaxations. This provides short-term certainty for ongoing and planned ECB transactions. Lenders should note that the ceiling may be revised after March 2013, so forward planning should account for potential changes.
What you must do
- Inform all constituents and customers about the continued applicability of the existing all-in-cost ceiling until March 31, 2013.
- Ensure all ECB transactions comply with the unchanged policy, including the cost ceiling.
- Monitor RBI announcements for any review or revision of the ceiling after March 2013.
- Maintain records of ECB approvals and cost calculations as per FEMA guidelines.
Who it affects
All Category-I Authorised Dealer Banks, Borrowers availing External Commercial Borrowings, Corporate treasuries and finance teams managing ECB
What is the all-in-cost ceiling for ECB that remains unchanged?
The ceiling specified in A.P. (DIR Series) Circular No. 99 dated March 30, 2012 continues to apply. The circular does not provide the specific rate, but it refers to that earlier circular for details.
When will the current all-in-cost ceiling be reviewed?
The ceiling is extended until March 31, 2013, and will be subject to review after that date. No further details on the review process are given.
Are there any other changes to ECB policy in this circular?
No. All other aspects of ECB policy remain unchanged. Only the all-in-cost ceiling extension is addressed.