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No RBI approval needed for prepaying ECBs up to $100 m

Our Bureau

MUMBAI, Sept. 16

THE Reserve Bank of India (RBI) has said that borrowers who have raised external commercial borrowings (ECBs) in accordance with the prevalent rules and regulations may prepay the outstanding ECB up to an amount of $100 million without obtaining prior permission from it.

In a press release, consequent to the Government's announcements on ECB liberalisations, the apex bank said, that this would enable corporates to take advantage of low international interest rates.

This liberalised automatic route will be available to all categories of borrowers irrespective of the residual maturity or percentage of the outstanding loan, as long as the amount being prepaid does not exceed $100 million.

Designated branches of authorised dealers may allow such remittances for prepayment of ECBs, after obtaining a certificate from auditors that the applicant has availed of the ECB in accordance with all relevant acts and regulations.

Authorised dealers are required to report to the RBI, Exchange Control Department, Central Office, Mumbai, full details of the prepayment in the a prescribed form within seven days of the remittance, as detailed in the circular, which is being issued separately.

RBI will expeditiously consider applications for prepayment of an amount exceeding $100 million for approval.

Borrowers who would like to avail of this facility must apply to the RBI, Central Office, Mumbai, with full particulars, like the period over which the prepayment was to be made and also whether `in principle' contract for prepayment had been negotiated with the lender, the release said.

Corporates who want `in principle' approval before negotiating a pre-payment contract may also approach the RBI. The `in principle' approvals will be valid for 15 days.

The facility under the automatic route for prepayment of ECBs will be available up to March 31, 2003. New instructions will be issued on or before that date in case the scheme is extended for a further period.

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