What changed
Earlier, AD banks could only approve changes in drawdown/repayment schedules under specific conditions, but any elongation beyond original maturity needed RBI approval. Now, RBI has delegated full power to AD Category-I banks to allow re-schedulement of ECB (both automatic and approval routes) before maturity, with conditions. This simplification removes the need for prior RBI approval for such re-schedulements, except for FCCBs which are excluded.
What it means for you
Banks can now process ECB re-schedulement requests faster without waiting for RBI clearance, reducing turnaround time for borrowers. However, banks must ensure strict compliance: no increase in interest rate or additional costs, AIC and AMP must stay within guidelines, and the borrower must not be in RBI's default/caution list or under ED investigation. This delegation eases operational burden on RBI but increases due diligence responsibility on AD banks.
What you must do
- Update internal ECB processing guidelines to include delegated re-schedulement approval authority.
- Verify borrower eligibility: ensure no default/caution list presence and no ED investigation.
- Check that re-schedulement does not increase interest rate or add any cost (foreign currency or INR).
- Confirm post-re-schedulement AIC and AMP comply with applicable ECB norms.
- Report re-schedulement to DSIM via revised Form 83 and maintain audit trail.
Who it affects
AD Category-I banks handling ECB approvals, Corporate borrowers with existing ECBs under automatic or approval routes, RBI's ECB monitoring and compliance teams
Can we approve re-schedulement for ECBs that have already matured?
No. Re-schedulement is allowed only once, before the original maturity of the ECB. Any elongation after maturity still requires prior RBI approval.
Does this circular apply to FCCBs?
No. The provisions of this circular explicitly do not apply to Foreign Currency Convertible Bonds (FCCBs).
What if the lender is an overseas branch of a domestic bank?
In such cases, the AD bank must ensure compliance with applicable prudential norms on account of re-schedulement.