Presently, approval of RBI is required for:
(a) Reduction in amount of ECB.
(b) Changes in the drawdown schedule where the original average maturity period is not maintained.
(c) Reduction in the all-in-cost of the ECB after obtaining LRN. This Circular has granted powers to banks to approve changes in respect of the above i.e., reduction in all-in-cost, subject to certain conditions and changes in the drawdown schedule when original maturity period is not maintained.
(a) Reduction in amount of ECB
Banks can approve reduction in loan amount in respect of ECB availed under the Automatic Route, provided
(i) Consent of the lender for reduction in loan amount has been obtained;
(ii) Average maturity period of the ECB is maintained;
(iii) Monthly ECB-2 returns in respect of the LRN have been submitted to the Department of Statistics and Information Management (DSIM); and
(iv) There is no change in the other terms and conditions of the ECB.
(b) Changes/modifications in the drawdown schedule when original average maturity period is not maintained
Banks can approve requests for changes/modifications in the drawdown schedule resulting in the original average maturity period undergoing change in respect of ECB availed both under the Automatic and Approval Routes. However, any elongation/ rollover in the repayment, on expiry of the original maturity of the ECB, will continue to require the prior approval of RBI.
The approval can be granted provided:
(i) There are no changes/modifications in the repayment schedule of the ECB;
(ii) Average maturity period of the ECB is reduced as against the original average maturity period stated in the Form 83 at the time of obtaining the LRN;
(iii) Reduced average maturity period complies with the stipulated minimum average maturity period as per the extant ECB guidelines;
(iv) Change in all-in-cost is only due to the change in the average maturity period and the ECB complies with the extant guidelines; and
(v) Monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.
(c) Reduction in the all-in-cost of ECB Banks can approve requests for reduction in allin- cost, in respect of ECB availed both under the Automatic and Approval Routes, provided
(i) Consent of the lender has been obtained and there are no other changes in the terms and conditions of the ECB; and
(ii) Monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.
