FOREIGN
EXCHANGE MANAGEMENT (BORROWING OR LENDING IN FOREIGN EXCHANGE) REGULATIONS,
2000 [AMENDED UPTO 2015]
In exercise of the powers conferred by clause (d) of Sub-Section (3) of
Section 6, sub- section (2) of Section 47 of the Foreign Exchange Management
Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations for
borrowing or lending in foreign exchange by a person resident in India; namely:
Regulation - 1. Short Title and Commencement.
(i) These Regulations may
be called the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000.
(ii) They shall come into
force on 1st day of June, 2000.
Regulation - 2. Definitions.
In these regulations,
unless the context otherwise requires -
(a) 'Act' means the
Foreign Exchange Management Act, 1999 (42 of 1999);.
(b) 'authorised dealer'
means a person authorised as an authorised dealer under sub- section (1) of
section 10 of the Act;
(c) 'EEFC account', 'RFC
account' mean the accounts referred to in the Foreign Exchange Management
(Foreign currency accounts by a person resident in India) Regulations, 2000;
(d) 'FCNR (B) account',
'NRE account' mean the accounts referred to in the Foreign Exchange Management
(Deposit) Regulations, 2000;
(e) 'Indian entity' means
a company or a body corporate or a firm in India;
(f) 'Joint Venture
abroad' means a foreign concern formed, registered or incorporated in a foreign
country in accordance with the laws and regulations of that country and in
which investment has been made by an Indian entity;
(g) 'Schedule' means the
Schedule to these Regulations;
(h) 'Wholly owned
subsidiary abroad' means a foreign concern formed, registered or incorporated
in a foreign country in accordance with the laws and regulations of that
country and whose entire capital is owned by an Indian entity;
(i) the words and
expressions used but not defined in these Regulations shall have the same
meaning respectively assigned to them in the Act.
Regulation - 3. Prohibition to Borrow or Lend in Foreign Exchange.
Save as otherwise
provided in the Act, Rules or Regulations made thereunder, no person resident
in India shall borrow or lend in foreign exchange from or to a person resident
in or outside India:
Provided that the
Reserve Bank may, for sufficient reasons, permit a person to borrow or lend in
foreign exchange from or to a person resident outside India.
Regulation - 4. Borrowing and Lending in Foreign Exchange by an Authoriseddealer.
(1) An authorised dealer
in India or his branch outside India may lend in foreign currency in the circumstances
and subject to the conditions mentioned below, namely:
(i) A branch outside
India of an authorised dealer being a bank incorporated or constituted in
India, may extend foreign currency loans in the normal course of its banking
business outside India;
(ii) An authorised dealer
may grant loans to his constituents in India for meeting their foreign exchange
requirements or for their rupee working capital requirements or capital
expenditure subject to compliance with prudential norms, interest rate directives
and guidelines, if any, issued by Reserve Bank in this regard;
(iii) An authorised dealer
may extend credit facilities to a wholly owned subsidiary abroad or a joint
venture abroad of an Indian entity;
Provided that not
less than 51 per cent of equity in such subsidiary or joint venture is held by
the Indian entity subject to compliance with the Foreign Exchange
Management(Transfer and Issue of Foreign Security) Regulations, 2000;
(iv) An authorised dealer
may, in his commercial judgment and in compliance with the prudential norms,
grant loans in foreign exchange to his constituent maintaining [***]
RFC Account, against the security of funds held in such account.
(v) A branch outside
India of an authorised dealer may extend foreign currency loans against the security
of funds held in NRE/FCNR deposit accounts maintained in accordance with the
Foreign Exchange Management (Deposit) Regulations, 2000.
(vi) Subject to the
directions or guidelines issued by the Reserve Bank from time to time, an
authorised dealer in India may extend foreign currency loans to another
authorised dealer in India.
(vii) [An authorised dealer
may grant foreign currency loans in India against the security of funds held in
FCNR (B) account to the account holder only, subject to the guidelines issued
by the Reserve Bank in this regard.]
(2) An authorised dealer
in India may borrow in foreign currency in the circumstances and subject to the
conditions mentioned below, namely:
(i) An authorised dealer
may borrow from his Head Office or branch or correspondent outside India [or
any other entity as permitted by Reserve Bank] upto [hundred
percent or such other limit as decided by the Reserve Bank, from time to time]
of his unimpaired Tier I capital or US$ 10 million, whichever is more, subject
to such conditions as the Reserve Bank may direct.
Explanation: For
the purpose of clause (i), the aggregate loans availed of by all branches in
India of the authorised dealer from his Head Office, all branches and
correspondents outside India, shall be reckoned.
[***]
(ii) A branch outside
India of an authorised dealer being a bank incorporated or constituted in
India, may borrow in foreign currency in the normal course of its banking
business outside India, subject to the directions or guidelines issued by the Reserve
Bank from time to time, and the Regulatory Authority of the country where the
branch is located.
(iii) An authorised dealer
may borrow in foreign currency from a bank or a financial institution outside
India, for the purpose of granting pre-shipment or post-shipment credit in
foreign currency to his exporter constituent, subject to compliance with the
guidelines issued by the Reserve Bank in this regard.
Regulation - 5. Borrowing and Lending in Foreign Exchange by persons other than authorized dealer.
(1) An Indian entity may
lend in foreign exchange to its wholly owned subsidiary or joint venture abroad
constituted in accordance with the provisions of Foreign Exchange Management
(Transfer or issue of foreign security) Regulations, 2000.
(2) A person resident in India
may borrow, whether by way of loan or overdraft or any other credit facility,
from a bank situated outside India, for execution outside India of a turnkey
project or civil construction contract or in connection with exports on
deferred payment terms, provided the terms and conditions stipulated by the
authority which has granted the approval to the project or contract or export
in accordance with the Foreign Exchange Management (Export of goods and
services) Regulations, 2000.
(3) An importer in India
may, for import of goods into India, avail of foreign currency credit for a
period not exceeding six months extended by the overseas supplier of goods,
provided the import is in compliance with the Export Import Policy of the
Government of India in force.
(4) A person resident in
India may lend in foreign currency out of funds held in his EEFC account, for
trade related purposes to his overseas importer customer:
[Provided that where
the amount of loan exceeds US $ 100,000, a guarantee of a bank of international
repute situated outside India is provided by the overseas borrower in favour of
the lender.]
(5) Foreign currency
loans may be extended by Export Import Bank of India, Industrial Development
Bank of India, Industrial Finance Corporation of India, Industrial Credit and
Investment Corporation of India Limited, Small Industries Development Bank of
India Limited. or any other institution in India to their constituents in India
out of foreign currency borrowings raised by them with the approval of the
Central Government for the purpose of onward lending.
(6) [Indian companies in
India may grant loans in foreign currency to the employees of their branches
put side India for personal purposes provided that the loan shall be granted
for personal purposes in accordance with the lender's Staff Welfare Scheme/Loan
Rules and other terms and conditions as applicable to its staff resident in
India and abroad.]
Regulation - [6. Other borrowings in foreign exchange under Automatic Route or with prior approval of Reserve Bank of India under the Approval Route or as Trade Credit
(1) A person resident in
India, other than a branch or office in India owned or controlled by a person
resident outside India, may raise in accordance with the provisions of the
Automatic Route Scheme specified in Schedule I, foreign currency loans of the
nature and for the purposes as specified in that Schedule; provided that this
shall be deemed to have come into force with effect from February 1, 2004
except in relation to item 1(iv)(A)(c) of Schedule I which shall be deemed to
have come into force with effect from February 23, 2004.
(2) A person resident in
India who desires to raise foreign currency loans of the nature or for the
purposes as specified in Schedule II and who satisfies the eligibility and
other conditions specified in that Schedule, may apply to the Reserve Bank for
prior approval to raise such loans; provided that this shall be deemed to have
come into force with effect from February 1, 2004 except in relation to item
3(iii)(A)(c) of Schedule II which shall be deemed to have come into force with
effect from February 23, 2004.
(3) Trade Credit not
exceeding USD 20 million per import transaction shall be raised by borrowings
subject to the terms specified in Schedule III hereto; provided that this shall
be deemed to have come into force with effect from April 17, 2004.]
(4) [Where prior approval
is required] The Reserve Bank may grant its approval subject to such terms and
conditions as it may consider necessary;
Provided that while
considering the grant of approval, the Reserve Bank shall take into account the
overall limit stipulated by it, in consultation with the Central Government,
for availment of such loans by the persons resident in India.
(5) [The Reserve Bank may
grant its approval to any other foreign currency loan proposed to be raised by
a person resident in India, which falls outside the scope of Schedules I, II
and III, subject to such terms and conditions as it may consider necessary.]
[SCHEDULE I
[(See
Regulation 6(1)]
Borrowings in Foreign
Exchange under the Automatic Route
(1)
Borrowing in Foreign
Exchange up to US$ 500 Million or its equivalent.
The borrowing in
foreign exchange by a person resident in India under the Automatic Route is
subject to the terms and conditions set out in this schedule.
(i)
[Eligibility:
(a) Any company
registered under the Companies Act, 1956, other than a financial intermediary
(such as a Bank, financial institution, housing finance company and a
non-banking finance company is eligible to borrow under this Schedule.
[provided in case the
entity is under investigation / adjudications / appeals by the law enforcing
agencies, for violation of any of the provision of the regulations under the
Act, it shall indicate to the Authorized Dealers (ADs) about pendency of
investigations / adjudications / appeals, while availing foreign currency
borrowing.]
(b) [Non Government Organisations
and Micro Finance Institutions engaged in micro-finance activities may borrow
in foreign exchange under this Schedule under such terms and conditions as
specified by the Reserve Bank from time to time.
[provided in case the
entity is under investigation / adjudications / appeals by the law enforcing
agencies, for violation of any of the provision of the regulations under the
Act, it shall indicate to the Authorized Dealers (ADs) about pendency of
investigations / adjudications / appeals, while availing foreign currency
borrowing.]
(c) Any other entity as
specified by the Reserve Bank.]
[provided in case the
entity is under investigation / adjudications / appeals by the law enforcing
agencies, for violation of any of the provision of the regulations under the
Act, it shall indicate to the Authorized Dealers (ADs) about pendency of
investigations / adjudications / appeals, while availing foreign currency
borrowing.]
(ii)
[Amount:
(a) The borrowing in
foreign exchange by an entity as specified in paragraph (i) (a) of section I of
Schedule I, under the Automatic Route whether raised in tranches or otherwise,
shall not exceed USD 500 million or equivalent in any one financial year (April
March).
(b) [The borrowings in
foreign currency under as specified in paragraph(i) (b) of section I of
Schedule I, by a non-government organisation and Micro Finance Institution
engaged in micro-finance activities shall not exceed USD 10 million or
equivalent during a financial year (April-March).]
(iii)
Lenders:
The borrowings in
foreign currency by way of issue of bonds, floating rate notes or other debt
instruments by whatever name called may be made from -
(a) International bank or
export credit agency or international capital market or
(b) Multilateral
financial institutions, namely, IFC, ADB, CDC etc., or
(c) Foreign collaborator
or foreign equity holder as specified by the Reserve Bank or
(d) Supplier of
equipments provided the amount of loan raised does not exceed the total cost of
the equipment being supplied by the lender or
(e) Any other eligible
entity as prescribed by the Reserve Bank in consultation with Government of
India.
(iv)
Purpose (End-use)
(A) Borrowing in foreign
exchange in terms of this Schedule may be for any of the following purposes,
namely:
(a) for investment (such
as import of capital goods, new projects, modernisation / expansion of existing
production units) in real sector - industrial sector including small and medium
enterprises (SME) and infrastructure sector -in India.
[Explanation: The
following sectors will qualify as infrastructure sectors, namely,
(b) Energy which will
include (i) electricity generation, (ii) electricity transmission, (iii)
electricity distribution, (iv) oil pipelines, (v) oil/gas/liquefied natural gas
(LNG) storage facility (includes strategic storage of crude oil) and (vi) gas
pipelines (includes city gas distribution network);
(c) Communication which
will include (i) mobile telephony services/companies providing cellular
services, (ii) fixed network telecommunication (includes optic fibre/cable
networks which provide broadband/internet) and (iii) telecommunication towers;
(d) Transport which will
include (i) railways (railway track, tunnel, viaduct, bridges and includes
supporting terminal infrastructure such as loading/unloading terminals,
stations and buildings), (ii) roads and bridges, (iii) ports, (iv) inland
waterways, (v) airport and (vi) urban public transport (except rolling stock in
case of urban road transport);
(e) Water and sanitation
which will include (i) water supply pipelines, (ii) solid waste management,
(iii) water treatment plants, (iv) sewage projects (sewage collection,
treatment and disposal system), (v) irrigation (dams, channels, embankments,
etc.) and (vi) storm water drainage system;
(f) (i) mining, (ii)
exploration and (iii) refining;
(g) Social and commercial
infrastructure which will include (i) hospitals (capital stock and includes
medical colleges and para medical training institutes), (ii) Hotel Sector which
will include hotels with fixed capital investment of Rs. 200 crore and above,
convention centres with fixed capital investment of Rs. 300 core and above and
three star or higher category classified hotels located outside cities with
population of more than 1 million (fixed capital investment is excluding of
land value), (iii) common infrastructure for industrial parks, SEZs, tourism
facilities, (iv) fertilizer (capital investment), (v) post harvest storage
infrastructure for agriculture and horticulture produce including cold storage,
(vi) soil testing laboratories and (vii) cold chain (includes cold room
facility for farm level pre-cooling, for preservation or storage or agriculture
and allied produce, marine products and meat.
(h) Any other sectors as
prescribed by the Reserve Bank in consultation with Government of India.]
[(AA) Borrowings in
foreign exchange per borrower company per financial year up to such amounts not
exceeding US Dollars 500 million or its equivalent as directed by the Reserve
Bank from time to time shall be permitted for such permissible end-uses as
indicated by Reserve Bank from time to time.]
(B) Other than the
purposes specified hereinabove, the borrowings shall not be utilised for any
other purpose including the following purposes, namely:
On-lending,
investment in capital (stock) market, investment in real estate business,
working capital requirements, general corporate purpose, and repayment of Rupee
loans
[***]
(v)
[Maturity
The maturity of the borrowings in foreign
exchange shall be as under:
|
Amount
|
Minimum
Average Maturity
|
|
i)
Up to USD 20 Million or equivalent
|
Not
less than 3 years.
|
|
ii)
Exceeding USD 20 Million or equivalent and upto USD 750 Million or equivalent
|
Not
less than 5 years.
|
Note
- Borrowing up to US$ 20 Million can have call / put option provided
the minimum average maturity of 3 years as prescribed above is complied with
before exercising call / put option.]
(vi)
All-in-cost ceilings
The all-in-cost
ceilings for the borrowing in foreign exchange shall be specified by the
Reserve Bank from time to time
(vii) Security
The borrower shall be
at liberty to provide security to the lender / suppliers, provided that-
(a) Where the security is
in form of immovable property in India or shares of a company in India, it
shall be subject to Regulation 8 of Notification No.FEMA.21/2000-RB dated May
3, 2000 and Regulation 3 of Notification No.FEMA.20/2000-RB dated May 3, 2000,
respectively.
(b) Guarantee
Banks, financial
institutions and Non-Banking Finance Companies shall not provide (issue)
guarantee or Letter of Comfort or Standby Letter of Credit in favour of
overseas lender on behalf of their constituents for their borrowings in foreign
exchange.
(viii)
Prepayment
Notwithstanding the
provisions of clause (v) above, prepayment of outstanding foreign currency loan
may be made as per the directives issued by the Reserve Bank from time to time.
(ix)
[Parking of loan
amount
The proceeds
of borrowings in foreign exchange availed under the schedule may,
pending utilisation for permissible end-uses be parked abroad or in India as
directed by the Reserve Bank from time to time.]
(x)
Loan Agreement
The loan agreement
entered into by the borrower with the overseas lender shall strictly conform
with these Regulations. The procedure for obtaining loan registration number
would be prescribed by the Reserve Bank.
(xi)
Drawal of Loan
Draw-downs of
borrowing in foreign exchange shall be made strictly in accordance with the
terms of the loan agreement only after obtaining the loan registration number
from the Reserve Bank.
(xii) Reporting
The borrower shall
adhere to the reporting procedure as specified by the Reserve Bank from time to
time.
(xiii)
Debt Servicing
The designated
Authorised Dealer (AD) shall have the general permission to make remittances of
principal, interest and other charges in conformity with the guidelines on
borrowing in foreign exchange from overseas, issued by Central Government / the
Reserve Bank from time to time.
(2)
Refinancing of existing borrowing in foreign exchange:
(i)
Refinancing
of outstanding amounts of loans raised in foreign exchange in accordance with
the Act or the Rules and Regulations made thereunder, may be made by making
fresh borrowing in foreign exchange in accordance with this Schedule provided
that there is reduction in cost of borrowing and the outstanding maturity of
the original borrowing is not reduced.
(ii)
Provisions
of sub-paragraphs (ii), and (v) of paragraph 1 shall not apply to the
borrowings made under Clause 2 (i),]
(3)
[Foreign currency
borrowings by successful bidders of 2G spectrum reauction:
(i)
The
successful bidders can avail of foreign currency borrowing in the nature of
bridge finance for the purpose of making upfront payment towards spectrum
allocation and refinance the same by making fresh borrowing in foreign exchange
in accordance with the Act or the Rules and Regulations made thereunder in
accordance with this Schedule, subject to satisfying the terms and conditions
as may be specified by the Reserve Bank, from time to time in this regard.
(ii)
Provisions
of sub-paragraph (v) of paragraph 1 shall not apply to the foreign currency
borrowing in the nature of bridge finance made under para 3(i).
(iii)
The
restriction of repayment of Rupee loans as specified in clause (B) in sub-paragraph
(iv) of paragraph 1 shall not apply to the foreign currency borrowing availed
of for refinancing domestic borrowings for making upfront payment towards
spectrum allocation.
(iv)
Such
foreign currency borrowings can also be availed of from the ultimate parent
company subject to satisfying the terms and conditions as may be specified by
the Reserve Bank, from time to time in this regard.]
(4)
[Provided
that under these Regulations, the Reserve Bank may, in consultation with the
Government of India, prescribe for the automatic route, any provision or
proviso regarding various parameters listed in paragraphs 1 to 3 above of this
Schedule or any other parameter as prescribed by the Reserve Bank and also
prescribe the date from which any or all of the existing proviso will cease to
exist, in respect of borrowings from overseas, whether in foreign currency or
Indian Rupees, such as addition/deletion of borrowers eligible to raise such
borrowings, overseas lenders/investors, purposes of such borrowings, change in
amount, maturity and all-in-cost, norms regarding security, pre-payment,
parking of ECB proceeds, reporting and drawal of loan, refinancing, debt
servicing, etc.]
[SCHEDULE II
[See
Regulation 6(2)]
Borrowings
in Foreign Exchange under the Approval Route
(1) The borrowing in
foreign currency (other than the borrowings under Schedule I) by a person
resident in India may be made under any of the types set out in this Schedule.
(2) The application for
the approval of the Reserve Bank under Regulation 6(2) for borrowing under any
of the types where its approval is required shall be made in the Form as
specified by the Reserve Bank from time to time.
(3) The borrowing in
foreign exchange by a person resident in India under the Approval Route is
subject to the terms and conditions set out in this schedule.
(i)
Eligibility:
The following
entities shall be eligible to apply for foreign currency borrowings under the
Approval Route -
(a) Any corporate
registered under the Company's Act, 1956.
(b) Financial
institutions dealing exclusively with infrastructure or export finance such as
IDFC, IL& FS, Power Finance Corporation, Power Trading Corporation, IRCON
and Exim Bank.
(c) Banks and financial
institutions which had participated in the textile or steel sector
restructuring package as approved by the Central Government.
(d) Entities falling
outside the purview of the Automatic Route as per Schedule I. ii) Lenders
(e) [Any other entity as
specified by the Reserve Bank.]
(f) The borrowings in
foreign currency by way of issue of bonds, floating rate notes or other debt
instruments by whatever name called may be made from –
(g) International bank or
export credit agency or international capital market or
(h) Multilateral
financial institutions, namely, IFC, ADB, CDC etc., or
(i) Foreign collaborator
or foreign equity holder as specified by the Reserve Bank or
(j) Supplier of
equipments provided the amount of loan raised does not exceed the total cost of
the equipment being supplied by the lender or
(k) Any other eligible
entity as prescribed by the Reserve Bank in consultation with Government of
India
(ii)
Purpose (End-use)
(A) Borrowing in foreign
exchange in terms of this Schedule may be for any of the following purposes,
namely:
(a) for investment (such
as import of capital goods, new projects, modernisation / expansion of existing
production units) in real sector - industrial sector including small and medium
enterprises (SME) and infrastructure sector -in India.
[Explanation: The
following sectors will qualify as infrastructure sectors, namely,
(a) Energy which will
include (i) electricity generation, (ii) electricity transmission, (iii)
electricity distribution, (iv) oil pipelines, (v) oil/gas/liquefied natural gas
(LNG) storage facility (includes strategic storage of crude oil) and (vi) gas
pipelines (includes city gas distribution network);
(b) Communication which
will include (i) mobile telephony services/companies providing cellular
services, (ii) fixed network telecommunication (includes optic fibre/cable
networks which provide broadband/internet) and (iii) telecommunication towers;
(c) Transport which will
include (i) railways (railway track, tunnel, viaduct, bridges and includes
supporting terminal infrastructure such as loading/unloading terminals,
stations and buildings), (ii) roads and bridges, (iii) ports, (iv) inland
waterways, (v) airport and (vi) urban public transport (except rolling stock in
case of urban road transport);
(d) Water and sanitation
which will include (i) water supply pipelines, (ii) solid waste management,
(iii) water treatment plants, (iv) sewage projects (sewage collection,
treatment and disposal system), (v) irrigation (dams, channels, embankments,
etc.) and (vi) storm water drainage system;
(e) (i) mining, (ii)
exploration and (iii) refining;
(f) Social and commercial
infrastructure which will include (i) hospitals (capital stock and includes
medical colleges and para medical training institutes), (ii) Hotel Sector which
will include hotels with fixed capital investment of Rs. 200 crore and above,
convention centres with fixed capital investment of Rs. 300 core and above and
three star or higher category classified hotels located outside cities with
population of more than 1 million (fixed capital investment is excluding of land
value), (iii) common infrastructure for industrial parks, SEZs, tourism
facilities, (iv) fertilizer (capital investment), (v) post harvest storage
infrastructure for agriculture and horticulture produce including cold storage,
(vi) soil testing laboratories and (vii) cold chain (includes cold room
facility for farm level pre-cooling, for preservation or storage or agriculture
and allied produce, marine products and meat.
(g) Any other sectors as
prescribed by the Reserve Bank in consultation with Government of India.]
(b) for first stage
acquisition of shares in the disinvestment process and also in the mandatory
second stage offer to the public under the Government's disinvestment programme
of PSU shares.
(c) for direct investment
in overseas Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS) subject to the
existing guidelines on Indian Direct Investment in JV/WOS abroad.
[(AA) Borrowings in
foreign exchange per borrower company per financial year up to such amounts as
directed by the Reserve Bank from time to time shall be permitted for such
permissible end-uses as indicated by Reserve Bank from time to time.]
(B) Other than the
purposes specified hereinabove, the borrowings shall not be utilised for any
other purpose including the following purposes, namely:
On-lending,
investment in capital (stock) market, investment in real estate business,
working capital requirements, general corporate purpose and repayment of Rupee
loans
(iii)
[***]
(iv)
[Maturity:
(a) The maturity of
borrowings in foreign exchange shall be as under:
|
Amount
|
Average Maturity
|
|
(i) Upto USD 20 million or equivalent
|
Not less than 3 years
|
|
(ii) Exceeding USD 20 million or
equivalent
|
Not less than 5 years
|
(b) Borrowings upto USD
20 million can have call/put option provided the minimum average maturity of 3 years
as prescribed in clause (a) is complied with before exercising call/put
option.]
(v)
All-in-cost ceilings
The all-in-cost
ceilings for the borrowing in foreign exchange shall be specified by the
Reserve Bank from time to time
(vi)
Security
The borrower shall be
at liberty to provide security to the lender / suppliers, provided that-
(a) Where the security is
in form of immovable property in India or shares of a company in India, it
shall be subject to Regulation 8 of Notification No.FEMA.21/2000-RB dated May
3, 2000 and Regulation 3 of Notification No.FEMA.20/2000-RB dated May 3, 2000,
respectively.
(b) Guarantee
Banks, financial
institutions and Non-Banking Finance Companies shall not provide (issue)
guarantee or Letter of Comfort or Standby Letter of Credit in favour of
overseas lender on behalf of their constituents for their borrowings in foreign
exchange.
[Exception 1] -
Banks, financial institutions and Non-Banking Finance Companies shall be
permitted to provide Bank Guarantee, or Letter of Comfort or Standby Letter of
Credit in favour of Small and Medium Enterprises (SMEs) with the approval of
the Reserve Bank.
[Exception- 2Banks
may provide Bank Guarantee, Standby Letter of Credit, Letter of Undertaking or
Letter of Comfort in respect of ECB by textile companies for modernisation or
expansion of their textile units, with the approval of the Reserve Bank.]
(vii) Prepayment
Notwithstanding the
provisions of clause (iv) above, prepayment of outstanding foreign currency
loan may be made as per the directives issued by the Reserve Bank from time to
time.
(viii)
[Parking of loan
amount
The proceeds
of borrowings in foreign exchange availed under the schedule may,
pending utilisation for permissible end-uses, be parked abroad or in India as
directed by the Reserve Bank from time to time.]
(ix)
Loan Agreement
The loan agreement
entered into by the borrower with the overseas lender shall strictly conform
with these Regulations. The procedure for obtaining loan registration number
would be as specified by the Reserve Bank.
(x)
Drawal of loan
Draw-downs of
borrowing in foreign exchange shall be made strictly in accordance with the
terms of the loan agreement only after obtaining the loan registration number
from the Reserve Bank.
(xi)
Reporting
The borrower shall
adhere to the reporting procedure as specified by THE Reserve Bank from time to
time.
(xii) Debt Servicing
The designated
Authorised Dealer (AD) shall have the general permission to make remittances of
principal, interest and other charges in conformity with the guidelines on
borrowing in foreign exchange from overseas, issued by Central Government / the
Reserve Bank from time to time.
(xiii)
[foreign currency
borrowings for low cost affordable housing projects
Developers/builders
meeting the eligibility criteria, Housing Finance Companies (HFCs) and National Housing Bank
(NHB) shall avail of foreign currency loans in accordance with the Act, or the
Rules and Regulations made thereunder in accordance with this Schedule, for
financing developers/prospective owners of low cost affordable housing
projects/units subject to the terms and conditions as may be specified by the
Reserve Bank from time to time in this regards.]
(4) Refinancing of
existing borrowing in foreign exchange:
(i) Refinancing of
outstanding amounts of loans raised in foreign exchange in accordance with the
Act or the Rules and Regulations made thereunder, may be made by making fresh
borrowing in foreign exchange in accordance with this Schedule provided that
there is reduction in cost of borrowing and the outstanding maturity of the original
borrowing is not reduced.
(ii) Provisions of
sub-paragraphs (iv) of paragraph 3 shall not apply to the borrowings made under
Clause 4(i).]
(5) [***]
[(6) Provided that
under these Regulations, the Reserve Bank may, in consultation with the
Government of India, prescribe for the approval route, any provision or proviso
regarding various parameters listed in paragraphs 1 to 5 above of this Schedule
or any other parameter as prescribed by the Reserve Bank and also prescribe the
date from which any or all of the existing provisions will cease to exist, in
respect of borrowings from overseas, whether in foreign currency or Indian
Rupees, such as addition / deletion of borrowers eligible to raise such
borrowings, overseas lenders / investors, purposes of such borrowings, change
in amount, maturity and all-incost, norms regarding security, pre-payment,
parking of ECB proceeds, reporting and drawal of loan, refinancing, debt
servicing, etc.]
[SCHEDULE III
[See
Regulation 6(3)]
Trade
Credit
(1) Foreign currency
credit/loan extended for imports in to India by the overseas supplier, bank and
financial institution for original maturity of less than 3 years is hereinafter
referred to as Trade Credit' for imports. Depending upon the source of finance,
such trade credit includes suppliers' credit or buyers' credit.
(2) Authorised Dealers
(ADs) in foreign exchange are permitted to approve trade credits up to USD 20
million per import transaction for import of all items permissible under the
Foreign Trade Policy (except Gold) with a maturity period (from the date of
shipment) up to one year. For import of capital goods, ADs are permitted to
approve trade credits up to USD 20 million per import transaction with a
maturity period of more than one year and less than three years. No
roll-over/extension will be permitted by the AD beyond the permissible period.
(3) Trade Credit
exceeding USD 20 million per import transaction will require the prior approval
of the Reserve Bank of India.]
Inserted by
Notification No GSR533(E) Dated 10.01.2003.7. Substituted
by Notification No: GSR208(E) dated 06.03.2004 for the following proviso:-
Provided that,-
(a) the aggregate
amount of such loans outstanding at any point of time does not exceed US$ 3
million; and
Inserted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Fifth
Amendment) Regulations, 2013 vide Notification No. GSR668(E) Dated
26.09.2013.
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Fourth
Amendment) Regulations, 2013 vide Notification No. GSR595(E) Dated 05.09.2013
for the following : - "[fifty percent]"
Sub regulation (ii) deleted and sub
regulation (iii) and (iv) enumbered as (ii) and (iii) by Notification no.
GSR60(E) dated 05.01.2005 w.e.f. 24.03.2004. Prior to deletion it was as under
:-
(ii) An authorised
dealer may borrow in foreign currency without limit from his head Office or
branch or correspondent outside India for the purpose of replenishing his rupee
resources, provided that -
(a) the funds
borrowed are utilised for his own business operations and are not invested in
call money or similar other markets;
(b) no repayment of
the loan is made without the prior approval of Reserve Bank, which may be
granted only if the authorised dealer has no borrowings outstanding either from
Reserve Bank or other bank or financial institution in India and is clear of
all money market borrowings for a period of at least four weeks prior to the
week in which the repayment is made.?
Inserted by Notification No
GSR533(E) Dated 10.01.2003.7. Substituted by Notification
No: GSR208(E) dated 06.03.2004 for the following proviso:-
Provided that,-
(a) the aggregate
amount of such loans outstanding at any point of time does not exceed US$ 3
million; and
(b) where the amount
of loan exceeds US$ 25,000, a guarantee of a bank of international repute
situated outside India is provided by the overseas borrower in favour of the
lender.?
Substituted by Notification
No GSR531(E) dated 08.01.2003 for the following:-
[(6) An individual
resident in India may borrow a sum not exceeding US$ 250,000/- or Its
equivalent from his close relatives outside India, subject to the conditions
that
(a)
the minimum maturity period of the loan is one year;
(b)
the loan is free of interest
(c)
and the amount of loan is received by inward remittance in free Foreign
exchange through normal banking channels or by debit to the NRE/FCNR account of
the non-resident lender.
Explanation:
'Close relative'
means relative as defined in Section 6 of the Companies Act, 1956,]"
Sub regulation (3)
renumbered as sub regulation (5) and substituted by Notification No GSR825(E)
dated 13.12.2004 for the following :-
Any other foreign
currency loan proposed to be raised by a person resident in India, which falls
outside the scope of the Schedule, shall require the prior approval of the
Central Government.?
Inserted by
GSR825(E) dated 13.12.2004.
Substituted by
GSR739(E) dt 06.12.2005 w.e.f. 25.04.2005 for the following :-
?i)
Eligibility
Any corporate
registered under the Companies Act, 1956 shall be eligible to borrow in terms
of this Schedule. However, financial intermediaries (such as banks, financial
institutions (FIs), housing financing companies, Non-Banking Finance Companies,
Trusts, Non-Profit making organisations (NPOs), Micro Finance Institutions,
proprietorship / partnership concerns and individuals are not eligible to
borrow under the Automatic Route.?
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2013 vide Notification No. GSR125(E) dated 06.02.2013
for the following : -
"[Provided that they have not at any
time violated any of the provisions of these regulations and no investigation
is pending against them for contravention of the provisions of these
regulations under the Act.]"
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2012 vide Notification No. GSR610(E) dated 30.05.2012
w.e.f. 19.12.2011 for the following : -
"Non-Government
Organisations engaged in Micro-finance activities may borrow in foreign
exchange under this Schedule under such terms and conditions as specified by
the Reserve Bank from time to time.
[Provided that they
have not at any time violated any of the provisions of these regulations and no
investigation is pending against them for contravention of the provisions of
these regulations under the Act.]"
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2013 vide Notification No. GSR125(E) dated 06.02.2013
for the following : -
"[Provided that they have not at any
time violated any of the provisions of these regulations and no investigation
is pending against them for contravention of the provisions of these
regulations under the Act.]"
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2013 vide Notification No. GSR125(E) dated 06.02.2013
for the following : -
"[Provided that they have not at any
time violated any of the provisions of these regulations and no investigation
is pending against them for contravention of the provisions of these
regulations under the Act.]"
Substituted by
GSR739(E) dt 06.12.2005 w.e.f. 25.04.2005 for the following :-
?ii)
Amount
The borrowing in
foreign exchange under the Automatic Route whether raised in tranches or
otherwise shall not exceed US$ 500 Million in any one financial year
(April-March).?
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Amendment)
Regulations, 2012 vide Notification No. GSR610(E) dated 30.05.2012 w.e.f.
19.12.2011 for the following : -
"(b) The
borrowings in foreign currency under as specified in paragraph (i) (b) of
section I of Schedule I, by a non-government organisation engaged in
micro-finance activities shall not exceed USD 5 million or equivalent during a
financial year (April-March).]"
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Third
Amendment) Regulations, 2013 vide Notification No. GSR627(E) Dated 19.07.2013
for the following : -
"[Explanation : The following sectors
will qualify as infrastructure sectors, namely (i) Power, (ii)
Telecommunication, (iii) Railways, (iv) Road including Bridges, (v) Sea Port
and Airport, (vi) Industrial Parks, (vii) Urban Infrastructure (water supply,
sanitation and sewage projects) and (viii) Mining, Exploration and
Refining.]"
Substituted by the
Foreign Exchange Management (Borrowing Or Lending In Foreign Exchange) (Second
Amendment) Regulations, 2009 vide Notification No. GSR547(E) Dated 17.06.2009
w.e.f. 29th day of May, 2008 for the following : -
"[(AA) Borrowings in foreign exchange
upto USD 500 million per borrower company per financial year shall be permitted
only for foreign currency expenditure for permissible end-use.]"
Omitted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2007 vide Notification No. GSR663(E) dated 30.08.2007
for the following w.e.f 21st day of May 2007 :-
"Note - For the
purpose of this clause, real estate business shall not include development of
integrated township as defined by the Government of India, Ministry of Commerce
and Industry, Department of Industrial Policy and Promotion, SIA (FC Division),
Press Note 3(2002 Series) dated January 4, 2002."
Substituted
Substituted by the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) (Amendment) Regulations, 2012 vide Notification No. GSR610(E) dated
23.09.2012 w.e.f. 23.09.2011 for the following : -
"v) Maturity
The maturity of the
borrowings in foreign exchange shall be as under:
|
Amount
|
Minimum Average Maturity
|
|
i) Up to US$ 20 Million or equivalent
|
Not less than 3 years.
|
|
|
Not less than 5 years
|
Note - Borrowing up to
US$ 20 Million can have call/put option provided the minimum average maturity
of 3 years as prescribed above is complied with before exercising call/put
option."
Substituted by the
Foreign Exchange Management (Borrowing or Lending In Foreign Exchange) (Second
Amendment) Regulations, 2009 vide Notification No. GSR547(E) Dated 17.06.2009
22nd day of October 2008 for the following:
"ix) Parking of
loan amount abroad
The proceeds of
borrowings in foreign exchange shall be parked abroad until actual requirement
in India."
Inserted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Second
Amendment) Regulations, 2012 vide Notification No. GSR832(E) Dated 12.11.2012
w.e.f. 17.11.2012.
Inserted by GSR825(E)
dated 13.12.2004.
Inserted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2007 vide Notification No. GSR663(E) dated 30.08.2007,
w.e.f 1st day of August, 2005.
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Third
Amendment) Regulations, 2013 vide Notification No. GSR627(E) Dated 19.07.2013
w.e.f. 19.07.2013 for the following : -
"[Explanation :
The following sectors will qualify as infrastructure sectors, namely (i) Power,
(ii) Telecommunication, (iii) Railways, (iv) Road including Bridges, (v) Sea
Port and Airport (vi) Industrial Parks, (vii) Urban Infrastructure (water
supply, sanitation and sewage projects) and (viii) Mining, Exploration and
Refining.]"
Substituted by the
Foreign Exchange Management (Borrowing Or Lending In Foreign Exchange) (Second
Amendment) Regulations, 2009 vide Notification No. GSR547(E) Dated 17.06.2009
w.e.f. 29th day of October, 2008 for the following : -
[(AA) External
Commercial Borrowings up to USD 20 million per borrowing company per financial
year for rupee expenditures for permissible end-use shall require prior
approval of the Reserve Bank of India.]
Omitted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2007 vide Notification No. GSR663(E) dated 30.08.2007,
w.e.f 21st day of May, 2007 for the following:-
"Note - For the
purpose of this clause, real estate business shall not include development of
integrated township as defined by the Government of India, Ministry of Commerce
and Industry, Department of Industrial Policy and Promotion, SIA (FC Division),
Press Note 3(2002 Series) dated January 4, 2002. "
Substituted by the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
(Amendment) Regulations, 2012 vide Notification No. GSR610(E) dated 30.05.2012 w.e.f.
23.11.2011 for the following :-
"[iv) Maturity
(a) The maturity of
borrowings in foreign exchange shall be as under :
|
Serial Amount Slumber
|
Average Maturity
|
|
(i) Upto US $ 20 million or
equivalent
|
Not less than 3 years
|
|
(ii) Exceeding US $ 20 million and
upto US $ 500 million or equivalent
|
Not less than 5 years
|
|
(iii) Exceeding US $ 500 million and
upto US $ 750 million or equivalent
|
More than 10 years
|
(b) Borrowings upto
US $ 20 million can have call/put option provided the minimum average maturity
of 3 years as prescribed in clause (a) is complied with before exercising
call/put option;
(c) No prepayment and
call/put options shall be permitted for borrowings in foreign exchange
exceeding an amount of US $ 500 million and up to an amount of US $ 750 million
or equivalent for a minimum average maturity of ten years."
Substituted by the
Foreign Exchange Management (Borrowing Or Lending In Foreign Exchange) (Second
Amendment) Regulations, 2009 vide Notification No. GSR547(E) Dated 17.06.2009
w.e.f. 22nd day of October, 2008 for the following : -
"viii)
Parking of loan amount abroad
The proceeds of
borrowings in foreign exchange shall be parked abroad until actual requirement
in India.
Omitted by the
Foreign Exchange Management (Borrowing or Lending In Foreign Exchange) (Fourth
Amendment) Regulations, 2012 vide Notification No. GSR916(E) dated 06.12.2012
w.e.f. 26.09.2011 for the following : -
"[(5) No corporate
registered under the Companies Act, 1956 shall avail domestic rupee denominated
structured obligations credit enhanced by international banks, international
financial institutions or joint venture partners, except with the prior
approval of the Reserve Bank.]"
Inserted by
GSR825(E) dated 13.12.2004.