What changed
The existing scheme for buyback/prepayment of FCCBs under the approval route, which expired on March 31, 2013, has been extended until December 31, 2013. After this date, the scheme will stand discontinued.
What it means for you
Banks and their corporate clients now have additional time until end-2013 to complete FCCB buybacks or prepayments under the approval route. This extension provides relief for companies facing maturing FCCBs, but the scheme's eventual discontinuation signals a shift in RBI's approach.
What you must do
- Inform all constituents and customers about the extended deadline of December 31, 2013 for FCCB buyback/prepayment under the approval route.
- Process any pending FCCB buyback/prepayment applications under the scheme before the new deadline.
- Advise clients to plan their FCCB restructuring or repayment strategies considering the scheme's discontinuation after December 31, 2013.
Who it affects
AD Category-I banks, Indian companies with outstanding FCCBs, Corporate treasuries managing foreign currency liabilities
What is the new deadline for FCCB buyback/prepayment under the approval route?
The scheme has been extended until December 31, 2013. It will be discontinued after that date.
Does this circular affect all FCCB transactions?
No, it only applies to buyback/prepayment under the approval route. Other FCCB transactions may be governed by separate regulations.
What legal authority does this circular derive from?
It is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.