RBI/2004/113
A.P.(DIR Series) Circular No.81
March 24, 2004
To
All Authorised Dealers in Foreign Exchange
Madam / Sirs,
Overseas Foreign Currency Borrowings
by
Authorised Dealers – Rationalisation
and Monitoring
Authorised Dealers (ADs) are allowed
to borrow in foreign currency in the circumstances and subject to such conditions
as mentioned under Regulation 4(2) of Notification
No.FEMA 3/2000-RB dated May 3, 2000.
2. Accordingly, in terms of
paragraph No.C.5(i) of RBI Master Circular on Risk
Management and Inter-Bank Dealings dated July 1, 2003, ADs may avail of
loans/overdrafts from their head offices, overseas branches and correspondents
up to 25 per cent of their unimpaired Tier-I capital or USD 10 million (or its
equivalent), whichever is higher. In terms of paragraph No.C.5(ii) of the above
circular, ADs may avail of loans in excess of the limits prescribed above solely
for replenishing their rupee resources in India subject to certain conditions.
Further, ADs may also borrow under lines of credit from a bank or a financial
institution outside India for the purpose of granting pre-shipment or post-shipment
credit in foreign currency to their exporter constituents in terms of and subject
to the conditions prescribed in IECD Master circular dated July 1, 2003 on Export
Credit in Foreign Currency.
3. In addition, ADs may also
avail of external commercial borrowings (ECBs) for specific purposes under the
ECB Policy against specific approval from the Reserve Bank of India.
4. It has now been decided
to rationalise the existing facilities for overseas borrowings and introduce
a monitoring and reporting system for all ADs. Accordingly, the facilities available
under paragraph Nos.C.5(i) and (ii) of the Master Circular dated July 1, 2003
will now be replaced by a single facility in terms of which all categories of
overseas foreign currency borrowings including existing ECBs and overdrafts
in Nostro accounts not adjusted within five days, shall not exceed 25 per cent
of their unimpaired Tier-I capital as at the close of the previous quarter,
or USD 10 million (or its equivalent), whichever is higher. Any fresh borrowing
above this limit shall only be with the prior approval of the Reserve Bank of
India. Applications for fresh ECBs will be made as per the ECB policy vide A.P.(DIR
Series) Circular No.60 dated January 31, 2004.
5. The following transactions
would continue to be outside the limit of 25 per cent of unimpaired Tier-I Capital
or USD 10 million (or its equivalent), whichever is higher :
- Overseas borrowings by ADs for the purposes
of financing export credit subject to the conditions prescribed in IECD
Master Circular dated July 1, 2003 on Export Credit in Foreign Currency.
- Subordinated debt placed by head offices of
foreign banks with their branches in India as Tier-II capital.
6. All ADs are advised to report
their total outstanding overseas foreign currency borrowings under all categories
as on March 20, 2004 to the Chief General Manager, Foreign Exchange Department,
(Forex Markets Division, Amar Building) Central Office, RBI, by March 31, 2004,
as per format appended (Annex). Similar report
may be furnished as on the last Friday of every month in order to reach Reserve
Bank of India by the 10th of the following month.
7. Necessary amendments to
the Foreign Exchange Management Regulations 2000, shall be issued separately.
8. The directions contained
in this circular have been issued under Sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999).
Yours faithfully,
Grace Koshie
Chief General Manager
Annex
[A.P.(DIR Series) Circular No.81
dated March 24, 2004]
Overseas Foreign Currency Borrowings
as on ……….
Amount (in equivalent#
USD)
|
Sr. No.
|
Item
|
Amount
|
|
A
|
Tier-I capital as at the close of previous
quarter……..
|
|
|
Category of Borrowing
|
|
1
|
Borrowings in terms of Para
C.5 (i) of Master Circular on Risk Management and Inter-Bank Dealings
dated July 1, 2003
|
|
|
2
|
Borrowings in excess of the
above limit for replenishment of rupee resources (Para C.5 (ii) *
|
|
|
3
|
External Commercial Borrowings
|
|
|
4
|
Borrowings under following
scheme as per IECD Master Circular on Export Credit in Foreign Currency
dated July 1, 2003 & Regulation 4.2(iv) of Notification no. FEMA 3/2000-RB
dated May 3, 2000
|
|
(a) Lines of Credit for
extending Pre-Shipment Credit in Foreign Currency (PCFC)
|
|
|
(b) Bankers Acceptance
Facility (BAF) / Loan from overseas for extending Rediscounting of Export
Bills Abroad Scheme (EBR)
|
|
|
5
|
Subordinated debt for inclusion
in Tier-II capital
|
|
|
6
|
Any other category (please
specify)
|
|
|
7
|
Total
|
|
|
8
|
Borrowings under categories
(1+2+3+6) expressed as a percentage of Tier-I capital at A
|
|
Note: 1. # RBI reference rate and New
York closing rates on the date of report may be used for conversion purpose.
2. * Facility since withdrawn
vide para 4 of this circular.