RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI-400 001
RBI/2004/233
A.P.(DIR Series) Circular No.94
June 7, 2004
To
All Authorised Dealers in Foreign Exchange
Dear Sirs/Madam,
Exchange Earners' Foreign Currency(EEFC)
Account Scheme – Trade Related Loans/Advances
Attention of Authorised Dealers
is invited to A.P.(DIR
Series) Circulars Nos.78 and 104
dated February 14, 2003 and May 31, 2003 in terms of which, exporters have been
permitted to grant trade related loans / advances from their EEFC Account to
their overseas importer customer without any ceiling, subject to compliance
with terms of sub-regulation (4) of regulation 5 of Notification No.FEMA 3/2000-RB
dated May 3, 2000, viz. Foreign Exchange Management Act (Borrowing or Lending
in Foreign Exchange) Regulations,2000. Further, as per Notification
No.FEMA.3/2000-RB, where the amount of loan exceeds USD 25,000 a guarantee
of a bank of international repute situated outside India is required to be provided
by the overseas borrower in favour of the lender.
2. As a measure of further
liberalisation, it has now been decided to raise the above limit to USD 1,00,000
from USD 25,000. Accordingly, guarantee of a bank of international repute situated
outside India will be required to be provided by the overseas borrower in favour
of the lender where the amount of trade related loan / advance by exporter out
of his EEFC Account exceeds USD 1,00,000.
3. The reporting requirement
will continue as per A.P.
(DIR Series) Circular 78 dated February 14, 2003.
4 The necessary amendment to
the Foreign Exchange Management Act (Borrowing or Lending in Foreign Exchange)
Regulations,2000 has been issued vide Notification No.FEMA 112/2004-RB dated
March 6,2004 (copy enclosed).
5. Authorised Dealers may bring
the contents of the circular to the notice of their constituents concerned.
6. 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).
Yours faithfully,
Grace Koshie
Chief General Manager
Encl : One
RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI - 400 001
Notification No.FEMA 112 /2004-RB
Dated : 6th March 2004
Foreign Exchange Management (Borrowing
or Lending in Foreign Exchange) (Amendment) Regulations 2004
In exercise of the powers conferred
by clause (d) of sub-section 3 of Section 6 of sub-section (2) of Section 47
of the Foreign Exchange Management Act, 1999 (42 of 1999) and in partial modification
of Notification
No.FEMA 3/2000-RB dated May 3, 2000, as amended from time to time, the Reserve
Bank of India makes the following Regulations to amend the Foreign Exchange
Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, namely:-
1. Short title and commencement
:-
(i) These Regulations may be called
the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) (Amendment)
Regulations, 2004.
(ii) They shall come into force
on their publication in the Official Gazette.
2. Amendment to the Regulations
:-
In the Foreign Exchange Management
(Borrowing or Lending in Foreign Exchange) Regulations, 2000, for the proviso
in sub-regulation 4 of regulation 5, the following proviso shall be substituted
:
'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'.
Sd/-
(Shyamala Gopinath)
Executive Director
G.S.R.208(E) dated March 6, 2004