Cancellation of LRN & Change in the end-use of ECB proceeds- Under RBI ECB Guidlines

Procedure for Reporting Cancellation of LRN & Change in the end-use of ECB proceeds- Under RBI ECB Guidlines

As per the extant ECB procedures any request for cancellation of Loan Registration Number (LRN) given by the Department of Statistics and Information Management (DSIM), Reserve Bank of India or change in permissible end-use for an existing ECB is required to be referred by the AD Category-I bank to the Foreign Exchange Department, Central Office, Reserve Bank of India for necessary approval.
3. As a measure of simplification of the existing procedures, it has been decided to delegate powers to the designated AD category-I banks to approve the following requests from the ECB borrowers, subject to specified conditions:

a) Cancellation of LRN

The designated AD Category-I bank may directly approach DSIM for cancellation of LRN for ECBs availed, both under the automatic and approval routes, subject to fulfilment of the following conditions:-
(i) no draw down for the said LRN has taken place; and
(ii) the monthly ECB-2 returns till date in respect of the LRN have been submitted to DSIM.
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b) Change in the end-use of ECB proceeds

The designated AD Category-I bank may approve requests from ECB borrowers for change in end-use in respect of ECBs availed under the automatic route, subject to the following conditions:-
(i) the proposed end-use is permissible under the automatic route as per the extant ECB guidelines;
(ii) there is no change in the other terms and conditions of the ECB;
(iii) the ECB is in compliance with the extant guidelines; and
(iv) the monthly ECB-2 returns till date in respect of the LRN have been submitted to DSIM.

The AD Category – I bank shall continue to monitor the utilization of end-use proceeds and changes in the end-use should be promptly reported to DSIM, RBI in Form 83. However, change in the end-use of ECBs availed under the approval route will continue to be referred to the Foreign Exchange Department, Central Office, Reserve Bank of India, as hitherto.

4. The above modifications to the ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy, such as, USD 750 million limit per company per financial year under the automatic route, eligible borrower, recognized lender, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.

Ref: RBI Master Circular -: RBI/2011-12/366  A.P. (DIR Series) Circular No.69 dated 25 January 2012

PROCEDURES FOR AVAILING ECB -EXTERNAL COMMERCIAL BORROWINGS

Before availing ECB , the borrower in India have to obtain LRN ( Loan Registration number ) from RBI under automatic route .

The procedure for obtaining LRN number is as follows:

For allotment of Loan Registration Number (LRN), borrowers are required to submit Form 83, in duplicate, certified by the Company Secretary (CS) or Chartered Accountant (CA) to the designated AD bank. One copy is to be forwarded by the designated AD bank to the Director, Balance of Payments Statistics Division, Department of Statistics and Information Systems (DSIM), Reserve Bank of India, Bandra-Kurla Complex, Mumbai – 400 051.

(c) The borrower can draw-down the loan only after obtaining the LRN from DSIM, Reserve Bank.

(d) Borrowers are required to submit ECB-2 Return certified by the designated AD bank on monthly basis so as to reach DSIM, Reserve Bank within seven working days from the close of month to which it relates.

Please note that  previous returns relating to ECB viz. ECB 3 – ECB 6 have been discontinued with effect from January 31, 2004.


Under automatic approval route , the following futher procedures have to be adhered :

* Board Resolution towards the ECB application.

* Loan Agreement to be entered with Recognized Lender.

* Documents related to application of LRN (Loan Registration Number) by filing Form 83 in duplicate duly certified by any Practicing Professional

*  The Certificate of Due Diligence to be submitted by the Overseas Organizations  / Individual Lender to AD Bank of Indian company (Borrower)

* Form 83 duly filled

* No Objection by AD Category I bank in case of creation of charge on immovable property if any.

* ECB Return - 2 on monthly basis once ECB is availed.

AUTHORISED DEALERS ( BANKS) HAVE NOW POWER TO APPROVE CHANGES IN ECB TERMS & CONDITIONS

AUTHORISED DEALERS ( BANKS) HAVE NOW POWER TO APPROVE CHANGES IN ECB TERMS & CONDITIONS

Changes / modifications in the drawdown / repayment schedule of the ECBs already availed, both under the approval and the automatic routes is simplified now.

As per the extant ECB procedures, any changes in the terms and conditions of the ECB after obtaining the Loan Registration Number (LRN) from the Department of Statistics and Information Management (DSIM), Reserve Bank, require the prior approval of the Reserve Bank. Accordingly, the requests of the borrowers for changes in the terms and conditions, such as, drawdown / repayment schedules, currency of borrowing and changes in designated AD bank, name of the borrowing company, etc. are referred to the Reserve Bank for necessary approval.

As a measure of simplification of the existing procedures, it has been decided to delegate powers to the designated AD category-I banks to approve the following requests from the ECB borrowers, subject to specified conditions:
a) Changes / modifications in the drawdown / repayment schedule

Designated AD Category – I banks may approve changes / modifications in the drawdown / repayment schedule of the ECBs already availed, both under the approval and the automatic routes, subject to the condition that the average maturity period, as declared while obtaining the LRN, is maintained. The changes in the drawdown / repayment schedule should be promptly reported to the DSIM, Reserve Bank in Form 83. However, any elongation / rollover in the repayment on expiry of the original maturity of the ECB would require the prior approval of the Reserve Bank.

b) Changes in the currency of borrowing

Designated AD Category I banks may allow changes in the currency of borrowing, if so desired, by the borrower company, in respect of ECBs availed of both under the automatic and the approval routes, subject to all other terms and conditions of the ECB remaining unchanged. Designated AD banks should, however, ensure that the proposed currency of borrowing is freely convertible.

c) Change of the AD bank

Designated AD Category - I banks may allow change of the existing designated AD bank by the borrower company for effecting its transactions pertaining to the ECBs subject to No-Objection Certificate (NOC) from the existing designated AD bank and after due diligence.

d) Changes in the name of the Borrower Company

Designated AD Category - I banks may allow changes in the name of the borrower company subject to production of supporting documents evidencing the change in the name from the Registrar of Companies.