What changed
RBI reviewed the all-in-cost ceiling for ECB and decided to keep the existing ceiling, originally specified in March 2012, applicable until March 31, 2014. The previous circular from July 2013 had set the stage for this review. No other ECB policy aspects were altered.
What it means for you
Banks and borrowers can continue using the same all-in-cost ceiling for ECB until end-March 2014, providing stability in borrowing costs. This extension avoids any sudden tightening of external borrowing limits. Lenders should note that the ceiling may be reviewed after March 2014, so planning for potential changes is prudent.
What you must do
- Inform all constituents and customers about the continued applicability of the existing all-in-cost ceiling until March 31, 2014.
- Ensure all ECB transactions comply with the unchanged all-in-cost ceiling as per the March 2012 circular.
- Monitor RBI announcements for any review of the ceiling after March 2014.
- Advise clients to factor in the current ceiling when structuring new ECB deals.
Who it affects
AD Category-I banks, Borrowers availing External Commercial Borrowings, Corporate treasuries and finance teams
What is the all-in-cost ceiling for ECB that remains applicable?
The ceiling is the same as specified in A.P. (DIR Series) Circular No. 99 dated March 30, 2012. The circular does not provide the specific rate, but it remains unchanged until March 31, 2014.
Does this circular change any other ECB rules?
No. All other aspects of ECB policy remain unchanged as per the circular.
What should AD Category-I banks do with this information?
Banks must bring the contents of this circular to the notice of their constituents and customers.