Mumbai: The Reserve Bank Wednesday allowed authorised dealer category banks to approve proposals of ECB borrower to change their lenders. ".... it has been decided to delegate powers to the designated AD Category-I banks to approve the request from the ECB borrowers with respect to change in the recognised lender when the original lender is an international bank or a multilateral financial institution...," RBI said in a notification. According to existing procedures for external commercial borrowings, any request for change of lender for an existing ECB is required to be referred by the Authorised Dealer Bank to the Reserve Bank for necessary approval. The new rules will also apply in case the lending party is a regional financial institution, government-owned development financial institution, export credit agency or supplier of equipment. However, the new lender has to a recognised one as per existing norms for raising External Commercial Borrowing (ECB). "However, changes in the recognised lender in case of foreign equity holder and foreign collaborator will continue to be examined by the RBI," the notification said. The modifications to the ECB guidelines will come in to force with immediate effect. "All other aspects of the ECB policy, such as USD 500 million limit per company per financial year under the automatic route, eligible borrower, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged," RBI said. ECBs are used as an additional source of funding by Indian corporates to augment available domestic resources. Corporates registered under the Companies Act, 1956, can access ECBs up to USD 500 million in a financial year under the automatic route. The ECB, which is not covered by the automatic route, is considered under the approval route on a case-by-case basis by the RBI.
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