The Reserve Bank of India (RBI) today simplified the external commercial borrowings (ECB) norms allowing banks to alter the terms of overseas debts including repayment schedule without prior permission from the central bank.
"As a measure of simplification of the exiting procedures, it has been decided to delegate powers to the designated AD (authorised dealer) category-I banks to approve requests from ECB borrowers," the RBI said in a release.
Earlier, the banks were required to seek RBI permission to modify the terms of foreign borrowings relating to repayment schedules, currency of borrowings and changes in AD bank, and name of the borrowing companies among others.
Companies raise ECBs through banks or a consortium of banks which are authorised by the RBI to deal in foreign currencies. These banks are called authorised dealers.
Now, banks can approve these changes and later report them to RBI. However, banks have to ensure that the average maturity period as declared, while obtaining the RBI's permission, is maintained. Also, the banks will have to get prior approval from the RBI for any increase in repayment period on expiry to the original maturity of ECBs.
Banks may also allow changes in the currency of borrowings if asked by the borrower. However, banks will have to ensure that the proposed currency is freely convertible.
The RBI said also banks are allowed to change the existing bank by the borrower company in respect of ECBs.