What changed
RBI reviewed the Renminbi ECB scheme, which allowed infrastructure firms to borrow up to USD 1 billion annually under approval route, and found it completely unused. Consequently, the scheme has been discontinued from the date of this circular, June 25, 2013.
What it means for you
Infrastructure companies can no longer raise ECB in Renminbi under the approval route, removing a funding option that was never utilized. Banks must update their forex advisory services and ensure no new RMB ECB applications are processed. This closure simplifies the ECB framework but may limit currency diversification for borrowers.
What you must do
- Immediately stop processing any new Renminbi ECB applications under the discontinued scheme.
- Notify all corporate customers, especially infrastructure firms, about the scheme's closure via circular or advisory.
- Update internal forex policy documents and training materials to reflect the removal of RMB ECB.
- Review any pending approvals or inquiries related to RMB ECB and advise customers accordingly.
Who it affects
AD Category-I banks handling forex transactions, Infrastructure companies that were eligible for RMB ECB, Corporate treasuries exploring Renminbi funding options
Why did RBI discontinue the Renminbi ECB scheme?
The scheme had zero utilization since its introduction in September 2011, so RBI decided to discontinue it effective June 25, 2013.
Can infrastructure companies still raise ECB in other currencies?
Yes, other ECB routes and currencies remain available under existing RBI guidelines; only the specific Renminbi scheme under approval route is discontinued.
What should banks do if a customer inquires about RMB ECB?
Inform them that the scheme has been discontinued and guide them to alternative ECB options in other currencies.