ECB reporting - ECB2

RBI has vide its circular dated 7th June, 2018 modified the monthly ECB-2 in respect of external commercial borrowings by capturing hedging of ECBs in the ECB2 return. Details of hedging in part E.1 of the return and foreign exchange earnings & expenditure in part E.2 of the return to be furnished in addition to the existing details in ECB-2

Gist of RBI circular given below:

Attention of Authorized Dealer Category I (AD Category I) banks is invited to Annex III of Part V of Master Direction No.18/2015-16 dated January 01, 2016 on Reporting under Foreign Exchange Management Act, 1999, as amended from time to time. The said Master Direction, inter alia, stipulates the reporting arrangement for ECBs through ECB-2 Return.

2. It has been decided to capture the details of the hedges for ECBs through a simplified format of ECB 2 Return. Part E of the Return, accordingly, is modified so as to include only standard information on hedged/unhedged ECB exposure (Annex). Details of hedging in Part E.1 of the Return and foreign exchange earnings and expenditure in Part E.2 of the Return should be furnished in additive format. Further, for reporting in respect of natural hedge, provisions contained in paragraph 2 (iii) of A.P. (DIR Series) Circular No. 15 dated November 07, 2016 should be followed.

3. Revised monthly reporting format of ECB 2 Return would be applicable from month-end June 2018. It is reiterated that any lapse at the time of reporting through this return and / or failure to adhere to the time line of its submission and / or any lapse at the time of reporting through Form 83 is a contravention of the provision of Foreign Exchange Management Act, 1999 (42 of 1999).

4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers. The aforesaid Master Direction No. 18 dated January 01, 2016 is being updated to reflect the changes.

5. The directions contained in this circular have been issued under sections 10(4) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11296&Mode=0

Re-schedulement of ECBs - simplification of procedure

RBI has vide its circular dated simplified its procedure for re-schedulement of External Commercial Borrowings. The re-schedulement will now be allowed subject to the following conditions:

1. Changes, if any, in all-in-cost (AIC) is only on account of the change in average maturity period (AMP) due to re-schedulement of ECB and post re-schedulement, the AIC and the AMP are in conformity with applicable guidelines. There should not be any increase in the rate of interest and no additional cost (in foreign currency / Indian Rupees) should be involved.
2. The re-schedulement is allowed only once, before the maturity of the ECB.
3. If the lender is an overseas branch of a domestic bank, the prudential norms applicable on account of re-schedulement should be complied with.
4. The changes on account of re-schedulement should be reported to DSIM through revised Form 83.
5. The ECB should be in compliance with all applicable guidelines related to eligible borrower, recognised lender, AIC, AMP, end-uses, etc.
6. The borrower should not be in the default / caution list of RBI and should not be under the investigation of Directorate of Enforcement.

The re-schedulement facility will be available both on automatic and approval route ECBs. The copy of the RBI circular can be found here.

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8870&Mode=0