Legal Document View

Unlock Advanced Research with PRISMAI

Integrated with over 4 crore judgments and laws — designed for legal practitioners, researchers, students and institutions

- Know your Kanoon - Doc Gen Hub - Counter Argument - Case Predict AI - Talk with IK Doc - ...
Upgrade to Premium
[Cites 0, Cited by 0] [Entire Act]

Union of India - Section

Section 6 in The Foreign Exchange Management (Borrowing Or Lending In Foreign Exchange) Regulations, 2000

6. [ Other borrowings in foreign exchange under automatic route or with prior approval of the 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 purpose 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 no exceeding US $ 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)[] [ Sub-regulation (2) renumbered as sub-regulation (4) by G.S.R. 825(E), dated 13.12.2004.] [Where prior approval is required] [ Inserted by G.S.R. 825(E), dated 13.12.2004.] 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)[] [ Sub-regulation (3) renumbered as sub-regulation (5) by G.S.R. 825(E), dated 13.12.2004.] [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.] [ Substituted by G.S.R. 825(E), dated 13.12.2004.][Schedule I] [Substituted by G.S.R. 825(E), dated 13-12-2004][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 corporate registered under the Companies Act, 1956, other than a financial intermediary (such as a bank, financial institution, housing finance company and a non-banking fincance company) is eligible to borrow under this Schedule. [Substituted by G.S.R. 739(E), dated 06-12-2005][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.]
(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. [Substituted by Notification No. G.S.R. 610 (E) dated 30.5.2012 (w.e.f. 19.12.2011)]
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.]
(c)Any other entity as specified by the Reserve Bank.]
[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.] [Inserted by Notification No. G.S.R. 836 (E) dated 22.9.2009 (w.e.f. 5.5.2000)][(ii) Amount. - (a) The borrowing in foreign exchange by an entity as specified in paragraph (i) (a) of section 1 of Schedule I, under the automatic route whether raised in tranches or otherwise, shall not exceed US $ 500 million or equivalent in anyone financial year (April-March).] [Substituted by G.S.R. 739(E), dated 06-12-2005]
(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 US $ 10 million or equivalent during a financial year (April-March).] [Substituted by Notification No. G.S.R. 610 (E) dated 30.5.2012 (w.e.f. 19.12.2011)]
(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,
(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.]
(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 derected 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: [Substituted by Notification No. G.S.R. 610 (E) dated 30.5.2012 (w.e.f. 23.9.2011)]
Amount MinimumMaturity Average
i) Upto USD 20 Million or equivalent Notless than 3 years
ii)Exceeding USD 20 Million or equivalent and upto USD 750 Millionor equivalent Notless 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 abroad. [Substituted by G.S.R. 547(E), dated 17-06-2009] - 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.