What changed
The earlier circular (April 24, 2012) required that ECB for working capital in civil aviation be raised within 12 months of its issue. RBI has now extended the scheme's validity to December 31, 2013, superseding the earlier 12-month deadline, allowing airlines more time to access foreign borrowing for working capital.
What it means for you
Banks can continue processing ECB proposals for civil aviation working capital without the earlier 12-month deadline pressure. This gives airlines and lenders more flexibility to arrange foreign loans for operational needs. The extension signals RBI's support for the sector's liquidity challenges.
What you must do
- Update internal ECB policy documents to reflect the new December 31, 2013 deadline for civil aviation working capital.
- Inform your corporate clients in the civil aviation sector about the extended window for raising ECB for working capital.
- Ensure all other ECB policy conditions (e.g., end-use, all-in-cost) remain unchanged and are complied with.
- Monitor any further RBI circulars on this subject for possible further extensions or modifications.
Who it affects
Authorized Dealer Category-I banks, Civil aviation companies (airlines, ground handling firms, etc.), Corporate borrowers in the aviation sector seeking working capital via ECB
What is the new deadline for raising ECB for working capital in civil aviation?
The scheme is now valid until December 31, 2013. The earlier 12-month limit from April 2012 has been removed.
Does this circular change any other ECB norms?
No. All other aspects of the ECB policy remain unchanged, including end-use restrictions, all-in-cost ceilings, and other conditions.
Which banks are affected by this circular?
All Authorized Dealer Category-I banks that handle ECB transactions for civil aviation clients are directly affected.