Ozg Corporate Funding Consultant
Ozg Center, New Delhi & Mumbai
Website: http://fundraising.ozg.in
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Phone # +91 (0) 88-007-25647
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Email: funding.consultant@ozg.co.in
RBI/2012-13/310
A.P. (DIR Series) Circular No.
54
November 26, 2012
To,
All Category - I Authorised
Dealer Banks
Madam / Sir,
External Commercial Borrowings
(ECB) Policy for 2G spectrum allocation
Attention of Authorized Dealer
Category - I (AD Category - I) banks is invited to A.P. (DIR Series) Circular
No. 26 dated October 22, 2008, para 2 (v) of A.P. (DIR Series) Circular No.19
dated December 9, 2009, A.P. (DIR Series) Circular No. 28 dated January 25,
2010 relating to External Commercial Borrowings (ECB) for spectrum allocation.
2. As per the extant policy,
eligible borrowers in the telecommunication sector are permitted to avail of
ECB for the purpose of payment for spectrum allocation, under the automatic
route. Successful bidders of 3G auction were also permitted to make the payment
for spectrum allocation initially out of Rupee resources to be refinanced with
a long-term ECB under the approval route subject to certain conditions.
3. On a review of the ECB
policy and keeping in view the large outlay of funds required to be paid
directly to the Government within a limited period of time, the following
relaxations are provided for the 2G spectrum auction:-
(i) Refinancing of Rupee
resources
The successful bidders making
the upfront payment for the award of 2G spectrum initially out of Rupee loans
availed of from the domestic lenders would be eligible to refinance such Rupee
loans with a long-term ECB, under the automatic route, subject to the following
conditions:
the long term ECB shall be raised within a
period of 18 months from the date of sanction of such Rupee loans for the
stated purpose from the domestic lenders;
the designated AD Category I bank has
evidenced the payment of upfront fees to GoI in the form of a receipt/challan
from DoT; and
the designated AD - Category I bank shall
monitor the end-use of funds.
(ii) Relaxation in
ECB-liability ratio and percentage of shareholding
The successful bidders in the
2G auction will be allowed to avail of ECB under the ‘automatic route’ from
their ultimate parent company without any maximum ECB liability-equity ratio subject
to the condition that the lender holds minimum paid-up equity of 25 per cent in
the borrower company, either directly or indirectly.
(iii) Bridge Finance facility
The successful bidders can
avail of short term foreign currency loan in the nature of bridge finance under
the ‘automatic route’ for the purpose of making upfront payment towards 2G
spectrum allocation and replace the same with a long term ECB under the
automatic route subject to the following conditions:-
the long term ECB is raised within a period
of 18 months from the date of drawdown of bridge finance; and
the long term ECB is in compliance with all
the extant guidelines on ECB.
4.The relaxations in respect
of the ECB liability-equity ratio, percentage of shareholding by the ultimate
parent, refinancing of Rupee loans and bridge finance are part of a special
dispensation applicable only to the successful bidders in the upcoming 2G
spectrum auction.
5. All other aspects of ECB
policy, such as USD 750 million limit per company per financial year under the
automatic route, eligible borrower, recognised lender, end-use, average
maturity period, all-in-cost, prepayment, refinancing of existing ECB and
reporting arrangements remain unchanged.
6. Reserve Bank has since
amended the Regulations and notified vide Notification No.245 / 2012 RB dated
November 12, 2012.
7. AD Category-I banks may
bring the contents of this circular to the notice of their constituents and
customers concerned.
8. The directions contained in
this circular have been issued under sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General
Manager
Ozg Corporate Funding Consultant
Ozg Center, New Delhi & Mumbai
Website: http://fundraising.ozg.in
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Phone # +91 (0) 88-007-25647
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Email: funding.consultant@ozg.co.in
