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October 2011

A.P. (DIR Series) Circular No. 11, dated 7-9- 2011 — External Commercial Borrowings — Simplification of Procedure.

By Gaurang Gandhi | Chartered Accountant
Reading Time 1 mins
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Presently, RBI approval is required for change of lender for existing External Commercial Borrowings (ECB).

This Circular has delegated the powers for approving change of lender for existing ECB to AD Category-I banks in cases where the original lender is an international bank or a multilateral financial institution (such as IFC, ADB, CDC, etc.) or a regional financial institution or a Governmentowned development financial institution or an export credit agency or supplier of equipment and the new lender also belongs to any one of the above mentioned categories, subject to the following:

(i) The new lender is a recognised lender as per the extant ECB norms;

(ii) There is no change in the other terms and conditions of the ECB; and

(iii) The ECB is in compliance with the extant guidelines.

However, RBI approval will have to be obtained, as at present, where change in the recognised lender is due to change of foreign equity holder and foreign collaborator.

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