[FEMA]StandbyLetterOfCredit/BankGuarantee-OverseasCommodityDerivativeContractUPTO 1 year

RBI/2008-09/277
A.P. (DIR Series) Circular No.35
10th November 2008

Remittance related to Commodity Derivative Contract
Issuance of Standby Letter of Credit / Bank Guarantee

Attention of Authorised Dealer Category - I (AD Category-I) banks is invited to Regulation 8 of Notification No.FEMA.25/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Foreign exchange derivative contracts) Regulations, 2000, as amended from time to time, regarding remittance of foreign exchange related to commodity derivative contract undertaken in accordance with the regulations.

2. The Reserve Bank has been receiving requests from banks for issuance of bank guarantee / standby letter of credit, in lieu of making a direct remittance towards payment obligations arising out of commodity derivative transactions entered into by customers with overseas counterparties. With a view to providing greater flexibility to resident entities who have such payment obligations related to commodity derivative contracts, it has been decided that AD Category-I banks may issue guarantees / standby letters of credit to cover these specific payment obligations subject to the conditions / guidelines given in the Annex to this Circular.

3. AD Category-I banks may issue guarantees / standby letters of credit only where the remittance is covered under the delegated authority or under the specific approval granted for overseas commodity hedging by the Reserve Bank.

4. The issuing bank shall have a Board approved policy on the nature and extent of exposures that the bank can take for such transactions and should be part of the credit exposure on the customers. The exposure should also be assigned risk weights, for capital adequacy purposes as per the extant provisions.

As per the Guideline,
1. It is to be issued for the specific purpose of payment of margin money [not exceeding the margin payments made to the specific counterparty during the previous FY] in respect of approved commodity hedging activities of the company.

2. After marking a lien & for a period UPTO 1 year & compliance of guidelines for overseas commodity hedging.

3. Broker's month-end reports duly confirmed / countersigned by corporate's financial controller have to be submitted and verified by the bank to ensure that all off-shore positions are / were backed by physical exposures.

[FEMA]NRE accounts - credit proceeds of account payee cheques

Foreign Exchange Management (Deposit) Regulations, 2000 Credit to Non Resident (External) Rupee Accounts - Clarification

RBI/2008-09/276
A.P. (DIR Series) Circular No.34

November 10, 2008

To

All Category - I Authorised Dealer Banks and Authorised Banks

Madam / Sir,

Foreign Exchange Management (Deposit) Regulations, 2000
Credit to Non Resident (External) Rupee Accounts - Clarification

Attention of Authorised Dealer Category - I (AD Category-I) banks and Authorised Banks is invited to A.P.(DIR Series) Circular No.45 dated May 30, 2008 on the captioned subject. In this connection, it is clarified that AD Category-I banks and authorised banks may credit proceeds of account payee cheques also in addition to demand drafts / bankers' cheques, issued against encashment of foreign currency to the NRE account of the NRI account holder where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I / Category-II.

ECN (like Physical Contract Note) in Equity Derivatives Segment

DERIVATIVES AND NEW PRODUCTS DEPARTMENT

SEBI/DNPD/143542 /Cir-43/08

November 06, 2008

To

The Managing Director / Executive Director

of Derivative Segment of NSE and BSE

and their Clearing Houses / Corporations.

Dear Sir,

Sub: Issuance of Electronic Contract Notes (ECNs) in Equity Derivatives Segment

1. This is in continuation of SEBI Circular no. DNPD/Cir-9/04 dated February 3, 2004, on the issuance of electronic contract notes as a legal document for Equity Derivatives like the physical contract note for the equity segment.

2. In consultation with the exchanges, it has now been decided to extend the facility of issuance of ECNs as a legal document using Straight Through Processing (STP) to the equity derivatives segment also.

3. Accordingly a model contract note in electronic form (IFN 515 messaging format) and confirmation of electronic contract note (IFN 598 messaging format) are enclosed as Annexure-A.

4. The Exchanges are advised to modify/amend their bye-laws, rules and regulations to;

a) Permit issuance of electronic contract note including all the standard pre-printed terms and conditions as given in the physical contract note.

b) Permit signing of the electronic contract note with a digital signature so as to make the modified format of the electronic contract note a valid legal document like the physical contract note.

c) Prescribe a standard format for the issuance of the electronic contract note.

5. The standard terms of contract as are required to be mentioned in the Contract Notes as per the Bye-laws and Regulations of exchanges, which are not contained in ECNs, shall be incorporated in the Client Broker Agreement or where applicable, the Tripartite Agreement between the stock broker, sub-broker and the client.

This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Encl : Annexure-A

[RBI] as Customer of Banks, know your rights

As you are aware, Reserve Bank has been time and again issuing various instructions / guidelines in the area of customer service to bring about improvements in the quality of customer service in banks and their branches.

Its good to know our rights...so click to know it.

In order to have all current instructions on the subject at one place, we have compiled many of the important instructions issued by us in the form of a Master Circular. Further, we have also included certain instructions issued only to Public Sector Banks and also by Indian Banks' Association at the instance of the Reserve Bank.

The Master Circular is given in the Annex. It may be noted that the Master Circular consolidates and updates all the instructions contained in the circulars listed in the Appendix to the Master Circular.

[SEBI] SLB to 30 days & normal trade timings

Sub: Review of Securities Lending and Borrowing (SLB) Framework

The framework for SLB was specified vide circular no. MRD/DoP/SE/Dep/ Cir- 14 /2007 dated December 20, 2007. SLB was operationalised with effect from April 21, 2008. Pursuant to feedback from market participants and proposals for revision of SLB received from NSE and BSE, the framework is being revised as under:

1. Tenure

Tenure for SLB may be increased to 30 days from the present 7 days.

2. Corporate Actions during the 30 day SLB contract

The SLB tenure of 30 days will result in the need for appropriate adjustments for corporate actions. The corporate actions may be treated as follows:

a. Dividend: The dividend amount would be worked out and recovered form the borrower at the time of reverse leg and passed on to the lender.

b. Stock split: The positions of the borrower would be proportionately adjusted so that the lender receives the revised quantity of shares.

c. Other corporate actions such as bonus/ merger/ amalgamation / open offer etc: The transactions would be foreclosed from the day prior to the ex-date. The lending fee would be recovered on a pro-rata basis from the lender and returned to the borrower.

3. Time window for SLB

The time for SLB session may be extended from the present one hour (10 am to 11 am) to the normal trade timings of 9:55 am to 3:30 pm.

[TakeoverCode]Creeping acquisition UPTO 5% in open market & Buy Back exemption amended

Dear All,

Consolidation of holdings under Takeover Regulations

As per extent of provisions of the SEBI Takeover Code the acquire can acquirer upto 55% of shareholding of a listed Company under 5% creeping acquisition limit.

Vide PR No.239/2008 dated 27^th October 2008 SEBI has decided that henceforth consolidation through creeping acquisition upto 5% be allowed to persons holding 55% and above but below 75%, subject to the condition that such acquisition can only be via open market purchases in the normal segment, and for the purpose, no consolidation via bulk/ block/ negotiated deal or through preferential allotment would be permitted.

Further, any increase in the holding of promoters pursuant to buy back, exemption under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations was required to be sought. It has now been decided to automatically exempt increase/ consolidation upto 5% per annum as a result of buy back by a company.

Necessary amendments to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations are being carried out separately.

Conclusion:

Vide this amendment:

• In addition to creeping acquisition benefit upto 55%, the acquirer who is holding 55% or above not exceeding 75% can go for creeping acquisition upto 5% only through open market purchase AND no other route.
• When there is increase in shareholding of the promoter due to buy back of securities, such increase upto 5% per annum is permitted and no need to sought excemption from the SEBI.
  
  
  Thanks & Regards
  Alagar
  CSchennai
  Karvy - Merchant Banking
  Contact: 919790906827

Amendments To Takeover Code – Oversight Or Intended?
This is further to our most recent hotline "Creep up to 75% - Takeover Code Relaxed" discussing the proposed amendments relating to shareholding consolidation under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the "Takeover Code") as announced by the Securities and Exchange Board of India ("SEBI") in its press release No. 239/2008 dated October 27, 2008 ("Press Release").
Whilst SEBI has finally effected the amendments on this Monday, November 3, 2008 and amended the Takeover Code, the amendments, on several counts, do not correspond to the amendments as suggested by the Press Release.
This Hotline attempts to bring out and discuss the discrepancies between the Press Release and the amendments (as effected), possible reasons behind the discrepancies and finally the implications of the amendments in their current form.
The Discrepancies - Amendments v. Press Release
SEBI has amended Regulation 11(2) of the Takeover Code by inclusion of a proviso, which is summarized as under (the "Amendments") —
Any person who holds 55% or more but less than 75% may acquire additional shares or voting rights entitling him up to 5% voting rights in the target company ("
Target") if--
(a) the acquisition is through open market purchase in normal segment on the stock exchange but not through bulk deal /block deal/ negotiated deal/ preferential allotment; or (b) the increase in the shareholding or voting rights of the acquirer is pursuant to a buyback of shares by the Target; and
the post acquisition shareholding of the acquirer together with persons acting in concert with him does not increase beyond seventy five per cent (75%).

So, what to do, on

• Acquisition of Shares up to 5% - Any person holding 55% or more (but less than 75%) shares of the Target permitted to further increase his shareholding by not more than 5% in the Target without making a public announcement.
• Increase in shareholding due to buyback - Public announcement not required if the shareholding of any shareholder holding 55% or more is increased up to 5% due to buyback. No "per annum" time limit stipulated.
• 75% threshold - Acquirer restricted from increasing his shareholding more than 75% without making a public announcement.

The Amendments appear to be open ended and create ambiguities leaving significant scope for interpretation. Herein below we analyze and attempt to understand SEBI's rationale behind each of these amendments.
Acquisition of shares up to 5%
One of the most important and critical feature of the Amendments is to do away with the requirement of making a public announcement when a shareholder/acquirer holding 55% or more shares proposes to consolidate his shareholding by further acquisition of up to 5% shares of the Target. Amendments leave it open ended for anyone to interpret whether the 5% acquisition limit stipulated in Regulation 11(2) is applicable to each financial year, or is only a one time affair. In fact, on account of the above ambiguity, though a little far-fetched, it is possible to interpret Regulation 11(2) to imply that a person holding more than 55% shares can go on acquiring shares of the Target from the open market in less than 5% tranches multiple times in a year. However, in light of the spirit of the Takeover Code and more particularly Regulation 11(1), it appears likely that the SEBI intended to apply such 5% limit each financial year.

Having said that, there are views that SEBI probably wants to permit such creeping acquisitions beyond 55% only once in the lifetime of the Target, and any further acquisitions whether in the same year or in the subsequent years should mandate a public announcement. This view is not entirely without foundation as the Amendments were introduced as an aggressive measure to bolster the bearish stock market, and knowing that SEBI would like to retrogress to a more cautious approach position as and when the markets gain momentum. In fact, earlier this year the Finance Ministry was contemplating steps to make 25% minimum public shareholding a uniformity across the board for listed companies, but decided against it apprehending it might encourage further selling activity from promoters and disappoint an already distressed stock market.
Buyback triggering public announcement
Another aspect of the Amendments which has come under debate is the application of Regulation 11(2) even to non promoters due to buyback. Amendments mark a significant turning point as shareholders holding 55% or more shares no longer need to approach the takeover panel for seeking exemption from making public announcements for up to 5% increase in their shareholding due to buy back. Prior to the Amendments, shareholders approached the takeover panel under Regulation 4(2) of the Takeover Code to seek exemption from making a public announcement if they anticipated that increase in their shareholding will require a public announcement to be made.
Separately, there are views that the Amendments may be disadvantageous to promoters if their shareholding increases by more than 5% due to an open market buyback, as they will still have to make a public announcement even when they are prohibited from participating in such buybacks.
75% Threshold
The clarification in the Amendments restricting shareholding consolidation beyond 75% leaves a room for interpretation whether the 75% threshold will stand modified to 90% in case of companies which are required to have a minimum public shareholding of 10%. In fact, had the Amendments not stipulated the 75% limit, it would have been only natural to read the 75% threshold in conjunction with the earlier proviso to Regulation 11(2), which provides that the 75% threshold will stand modified to 90% in cases where the listing norms permit minimum public shareholding of 10%.

Conclusion
While it remains to be seen whether the discrepancies mentioned above were the result of an oversight by the SEBI or were actually intentional, SEBI should take immediate steps to allay the ambiguities highlighted above to help the acquirers and stakeholders interpret the Amendments in the manner in which they were intended to by the SEBI.
- Ruchir Sinha & Nishchal Joshipura

[FEMA]Allocation of FII Investments - irrespective of Debt or Equity

Dear All,

Allocation of FII Investment between debt and equity

As you aware of that as per extent Schedule of the Foreign Exchange Management (Transfer or Issue of any Foreign Secuity) Regulations, 2004, in terms of which Foreign Institutional Investors are allowed to purchase, on repatriation basis, dated Government securities/treasury bills, listed non-convertible debentures/bonds, commercial papers issued by an Indian company and units of domestic mutual funds and Security Receipts issued by Asset Reconstruction Companies either directly from the issuer of such securities or through a registered stock broker on a recognized stock exchange in India, subject to:

1. The FII shall restrict allocation of its total investment between equity and debt instruments (including dated Government Securities and Treasury Bills in the Indian capital market) in the ratio of 70:30

2. If the FII desires to invest up to 100 per cent in dated Government Securities including Treasury Bills, non-convertible debentures/bonds issued by an Indian company, it shall form a 100 per cent debt fund and get such fund registered with SEBI; and

3. The total holding by a single FII in each tranche of scheme of Security Receipts shall not exceed 10 per cent of the issue and the total holdings of all FIIs put together shall not exceed 49 per cent of the paid up value of each tranche of scheme of Security Receipts issued by the Asset Reconstruction Companies.

In order to accord flexibility to the FIIs to allocate their investments across equity and debt instruments, the Securities and Exchange Board of India (SEBI) , vide its Circular No IMD/FII & C/33/2007 dated October 16, 2008 has dispensed with the conditions provided in Regulation 15 (2) of the SEBI FII Regulations pertaining to restrictions of 70: 30 ratio of investments in equity and debt, respectively. Accordingly, it has been decided, to dispense with the existing provisions under FEMA Regulations vide AP DIR Circular No.25 dated 17^th October 2008. However, the stipulations made in point no 3 above in respect of FII holdings in security receipts issued by Asset Reconstruction Companies shall continue.

So, now there is no restriction for investment by FII with regard to allocation of product like equity, debt etc w.e.f 17th Oct 2008.

--
Thanks & Regards
Alagar
CSchennai
Karvy - Merchant Banking
Contact: 919790906827

[ECB] rupee expenditure, rupee accounts, 3G spectrum & revised all-in-cost

Dear All,

Amendment of ECB Guidelines vide AP DIR Circular No.26 dated 22^nd Oct 2008 by RBI:

Change in end use restriction:

Prior to this amendment, borrowers in the infrastructure sector are allowed to avail ECB up to USD 100 million per financial year for Rupee expenditure for permissible end-uses under the Approval Route. Considering the huge funding requirements of the sector, particularly for meeting Rupee expenditure, the existing limit of USD 100 million has been raised to USD 500 million per financial year for the borrowers in the infrastructure sector for Rupee expenditure under the Approval Route. Provided ECBs in excess of USD 100 million for Rupee expenditure should have a minimum average maturity period of 7 years:

To ease liquidity pressure in the system henceforth, ECB up to USD 500 million per borrower per financial year would be permitted for Rupee expenditure and / or foreign currency expenditure for permissible end - uses under the Automatic Route. Accordingly, the requirement of minimum average maturity period of seven years for ECB more than USD 100 million for Rupee capital expenditure by the borrowers in the infrastructure sector has been dispensed with.

In order to further develops the telecom sector in the country, payment for obtaining license/permit for 3G Spectrum will be considered an eligible end - use for the purpose of ECB.

Change in parking of ECB proceeds in overseas:

At present, ECB proceeds are required to be parked overseas until actual requirement in India and such proceeds can be invested in the following liquid assets (a) deposits or certificate of deposit offered by banks rated not less than AA (-) by Standard and Poor / Fitch IBCA or Aa3 by Moody's; (b) deposits with overseas branch of an AD bank in India; and (c) Treasury bills and other monetary instruments of one year maturity having minimum rating as indicated above.

It has now been decided that henceforth the borrowers will be extended the flexibility to either keep these funds off-shore as above or keep it with the overseas branches / subsidiaries of Indian banks abroad or to remit these funds to India for credit to their Rupee accounts with AD Category I banks in India, pending utilisation for permissible end-uses. However, as hitherto, the rupee funds will not be permitted to be used for investment in capital markets, real estate or for inter-corporate lending.

Change in All in Cost:

In view of the tight liquidity conditions in the International financial markets, it has been decided to rationalize and enhance the all-in-cost ceilings as under:

Average Maturity Period	All-in-Cost ceiling over 6 months LIBOR*
	Exisitng	Revised
Three years and up to five years	200 bps	300 bps
More than five years and up to seven years	350 bps	500 bps
More than seven years	450 bps	500 bps

* for the respective currency of borrowing or applicable benchmark.

The all-in-cost ceilings will be reviewed from time to time depending on the conditions in the international financial markets.

Keeping in view the risks associated with unhedged foreign exchange exposures of SMEs, a system of monitoring such unhedged exposures by the banks on a regular basis is being put in place.

The said amendments to the ECB guidelines will come into force with immediate effect.

All other aspects of ECB policy such as USD 500 million limit per company per financial year under the Automatic Route, eligible borrower, recognised lender, end-use, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

Thanks & Regards
Alagar
CSchennai
Karvy - Merchant Banking
Contact: 919790906827

[SEBI]FAQ/Notes for CS Executive Program on Securities Law & Compliances

Yes, the Securities Exchange Board of India (SEBI) is helping ICSI students at the very right time by publishing an updated Frequently Asked Questions (FAQ) on various topics covered under Module-II, Paper 6 - "Securities Law and Compliances" of Company Secretary Executive Program.

It can really help you to understand the subject in a lucid manner, the most jolly way.

Now, CS friends can enjoy reading & win the forthcoming CS exams with ease.... Follow the following links...

FAQ-Issues

• Issues by Indian companies in India
• Issues by foreign companies in India (Indian Depository receipts)
• IPO Grading
• Electronic Clearing Scheme (ECS) for refunds
• Applications Supported by Blocked Amount (ASBA) Process

FAQ-Secondary Market

FAQ-Mutual Funds

FAQ-Foreign Institutional Investors

FAQ-Dematerialisation

FAQ-Derivatives

FAQ-Straight Through Processing

FAQ-Collective Investment Schemes

FAQ-Buyback of Securities

FAQ-Portfolio Managers

FAQ-Delisting

FAQ-Consent Orders

Enjoy FAQuin....

[SEBI-IDR]Lets Learn-Indian Depository Receipt-Meaning & Understanding

Credits to Mr. CS Pradeep for this wonderful presentation

LET’S LEARN

IDR - Indian Depository Receipt

IDR – the concept:

 

Concept of IDR introduced in 2004 through Companies (issue of IDR) Rules.

 

What is an IDR?

 

An IDR is an instrument in the form of a depository receipt created by a Domestic Depository in India against the underlying equity of issuing company.

 

Objective of IDRs:

 

The objective of IDR is to enable foreign issuers to raise funds from the Indian Financial Markets.

 

Legal Framework for IDRs:

 

The following is the legal framework as regards IDRs:

 

a. Companies Act –

 

l      General power to make rules (Section 642)

l      Specific power to make rules (Section 605A)

 

     b. Chapter VIA of the SEBI (DIP) Guidelines, 2000.

 

Eligibility criteria for IDR issuers:

 

As per the IDR rules an IDR issuer should satisfy the following:

 

l      Pre-issue paid-up capital and free reserves of the issuer company are at least US$ 50 millions

 

l      A minimum average market  capitalization in its domestic country of at least US$100 millions during the last 3 years

 

l      Trading record/history in India or elsewhere for at least 3 years

 

l      Track record of distributable profits for at least 3 out of immediately preceding 5 years

 

l      Equity shares offered in a financial year shall not exceed 25% of the post issue number of equity shares of the company

 

l      Fulfill eligibility criteria laid down by SEBI

 

SEBI’s powers under the IDR Rules:

 

Policy – related:

l      Specify additional eligibility criteria

l      Specify additional disclosures

 

Operational:

l      Give permission to come with IDR issue

l      Call for further information

l      Give observations on the offer document

 

Exercising the above powers, SEBI has laid down:

l      Disclosures in offer documents

l      Listing agreement

 

Other important points w.r.t. IDRs:

 

a.     Automatic fungibility of IDRs is restricted by RBI.

b.     NRIs and FIIs cannot purchase or possess IDRs unless special permission is taken from RBI.

c.      Repatriating proceeds of IDR issues out of India would entail permission of RBI.

d.     Size of IDR issue not to be less than Rs.50Cr.

e.     IDR issuers prohibited from issuing securities by home regulator not allowed.

 

New amendments made to Chapter VIA of DIP Guidelines and approved by the Board:

 

a.     All investors can now invest in an IDR issue, as opposed to only QIBs earlier.

b.     The minimum application size in an IDR issue has been reduced from Rs.2,00,000 to Rs.20,000/-.

[SEBI-ASBA] Lets Learn the Concept

Credits to Mr. CS Pradeep for this wonderful presentation

 

LET’S LEARN

 

ASBA – APPLICATIONS SUPPORTED BY BLOCK AMOUNT

 

What is ASBA?

 

SEBI has laid down detailed guidelines for a new application process for public issues. The new scheme named ASBA - Applications Supported by Blocked Amount is being introduced to cut down complaint-prone refund process in IPOs.

 

Is it compulsory?

 

The process is available as an alternate mode of application in all public issues made through the book building route. The scheme begun as a supplementary process and shall co-exist with the current process, wherein cheque is used as a mode of payment.  Click here to know the Detailed Guidelines.

 

How does it work?

 

Ø     The bank will block the money corresponding to the value of shares applied for in the bank account of the applicant itself. During the allotment period, the money does not leave the account of the investor, but since it is blocked he can’t use it for any other purpose.

 

Ø     If and when the shares get allotted, the money will be transferred to the issuer. In case the bid is rejected then, the money will be released immediately.

 

Ø     To keep it simple to begin with, SEBI has said that only those investors who are bidding at “cut off” [the final decided price] can opt for this scheme. Only one option is accepted for the number of shares bid for. It also says investors cannot revise their bid, though they can withdraw their bid in the period.

 

Ø     However, investor can’t go to any bank of his choice and ask for the service, yet. The Regulator said banks willing to offer this facility to apply for the same.

 

Ø     “A bank desirous of offering ASBA facility shall submit a certificate to SEBI, as per the specified format, for inclusion of its name in SEBI’s list of Self Certified Syndicate Banks (SCSB).

 

Ø     The IPO applications through this process can be accepted only by SCSBs, whose names appear in the list of SCSBs displayed in SEBI’s website, the SEBI order said. The investor will have the option of applying either through physical application forms or through electronic forms. 

 

Ø     SEBI has also notified other intermediaries like the merchant bankers, registrars to the issue and stock exchanges to make adequate changes in their systems to ensure that the applications that come through the new channel are treated on par with those from conventional channel.

 

What are the advantages of ASBA?

 

This will do away with immense paperwork involved and loss of money and peace of mind of investors. Consequently, there should be less investor complaints.

 

Click here to read the Detailed Guidelines.

[FEMA-ECB] Infrastructure sector upto USD 500 million & 7 years for USD > 100 million

RBI/2008-09/ 190 A. P. (DIR Series) Circular No. 16 dated September 22, 2008

Erstwhile ECB Limits

The all-in-cost ceilings for ECBs are modified as follows:

Average Maturity Period	All-in-Cost ceilings over 6 Months LIBOR*
	Existing	Revised
Three years and up to five years	200 bps	200 bps
More than five years and up to seven years	350 bps	350 bps
More than seven years [mandatory for USD in EXCESS of 100 million] Borrowers in the infrastructure sector can avail ECB UPTO 500 million per financial year under Approval Route	350 bps	450 bps
* for the respective currency of borrowing or applicable benchmark

The amendments to the ECB guidelines will come into force with immediate effect.

At present, borrowers in the infrastructure sector are allowed to avail ECB up to USD 100 million per financial year for Rupee expenditure for permissible end-uses under the Approval Route. Considering the huge funding requirements of the sector, particularly for meeting Rupee expenditure, the existing limit of USD 100 million has been raised to USD 500 million per financial year for the borrowers in the infrastructure sector for Rupee expenditure under the Approval Route. ECBs in excess of USD 100 million for Rupee expenditure should have a minimum average maturity period of 7 years.

All other aspects of the ECB policy such as USD 500 million limit per borrower per financial year under the Automatic Route, eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged. The existing limit of USD 50 million for Rupee expenditure under the Approval Route for borrowers other than those in the infrastructure sector also remains unchanged.