The Reserve Bank of India (RBI) has announced some policies last week. The salient features are as follows:
By a Circular dated January 2, 2009, the RBI dispensed with the requirement of all-in-cost ceilings on ECBs under the approval route, until June 30, 2009. This relaxation has now been extended until December 31, 2009.
“[I]t has been decided to increase the total amount of permissible buyback of FCCBs, out of internal accruals, from USD 50 million of the redemption value per company to USD 100 million, under the approval route by linking the higher amount of buyback to larger discounts. Accordingly, Indian companies may henceforth be permitted to buyback FCCBs up to USD 100 million of the redemption value per company, out of internal accruals, with the prior approval of the Reserve Bank …”.
The RBI has provided a stepped-up scale for discounts, i.e., the higher the amount to be repaid, the greater the discount to be offered for redemption.
The RBI has enhanced the existing cap of Rs. 20 lakh (2 million) to Rs.100 lakh (10 million) on loans against security of funds held in NR(E)RA and FCNR(B) deposits either to the depositors or third parties.
Separately, as regards transfer and sale of shares and debentures, the RBI passed a circular dated April 22, 2009 modifying the reporting mechanism for transfer of shares, preference shares and convertible debentures by way of sale. The RBI has also prescribed a modified Form FC-TRS. Details are available in the circular.