What changed
Earlier, corporates under investigation by agencies like the Directorate of Enforcement could not access ECB under the automatic route; such cases required RBI approval. Now, all entities can avail ECB under the automatic route despite pending investigations, adjudications, or appeals, without prejudice to outcomes. AD banks must endorse approval letters to the concerned agencies for such cases.
What it means for you
Banks can now process ECB proposals for investigated corporates under the automatic route without waiting for RBI nod, reducing approval timelines. However, AD banks must ensure they inform the investigating agencies by endorsing the approval letter, adding a compliance step. This change may increase ECB flows to entities under scrutiny, but banks must carefully verify eligibility and document endorsements.
What you must do
- Update internal ECB processing guidelines to allow automatic route for corporates under investigation, subject to agency endorsement.
- Ensure that for all such proposals, a copy of the approval letter is endorsed to the concerned law enforcement agency.
- Train staff on the new procedure and maintain records of endorsements for audit and compliance.
- Communicate the change to customers and constituents as directed by the circular.
Who it affects
AD Category-I banks, Corporates under investigation by law enforcement agencies, Law enforcement agencies (DoE, etc.)
Can a corporate under investigation by the Enforcement Directorate now get ECB without RBI approval?
Yes, under the automatic route, as per the revised policy, provided the AD bank endorses a copy of the approval letter to the concerned agency.
What is the AD bank's responsibility when approving ECB for an investigated entity?
The AD bank must intimate the concerned law enforcement agency by endorsing a copy of the approval letter, and follow the same procedure as RBI would for such cases.
Does this change affect other ECB norms like end-use or all-in-cost ceiling?
No, all other aspects of ECB policy under the automatic route remain unchanged, including amount, eligible borrower, end-use, cost ceiling, and reporting.