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TMI BlogForeign Exchange Management (Borrowing or Lending in Foreign Exchange) (Second Amendment) Regulations, 2004X X X X Extracts X X X X X X X X Extracts X X X X ..... eunder. 3. Amendment of Regulation 6 In the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, (hereinafter referred to as 'the Principal Regulations') (a) in Regulation 6, (i) for the Heading and sub-regulation (1), the following heading and sub-regulations shall be substituted, namely :- " 6. Other borrowings in foreign exchange under Automatic Route or with prior approval of 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 purposes as specified in Schedule II and who sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies, Non-Banking Finance Companies, Trusts, Non-Profit making organisations (NPOs), Micro Finance Institutions, proprietorship / partnership concerns and individuals are not eligible to borrow under the Automatic Route. ii) Amount The borrowing in foreign exchange under the Automatic Route whether raised in tranches or otherwise shall not exceed US$ 500 Million in any one financial year (April-March). 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 pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject 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 The proceeds of borrowings in foreign exchange shall be parked abroad until actual requirement in India. 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 registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 iii) 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 projects, namely:- i) Power, Telecommunications, Railways, Roads including bridges, Ports, Industrial Parks and Urban infrastructure (water supply, sanitation and sewage projects). b) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermitted to provide Bank Guarantee, or Letter of Comfort or Standby Letter of Credit in favour of Small and Medium Enterprises (SMEs) with the approval of the Reserve Bank. vii) Prepayment Notwithstanding the provisions of clause (iv) above, prepayment of outstanding foreign currency loan may be made as per the directives issued by the Reserve Bank from time to time. viii) Parking of loan amount abroad The proceeds of borrowings in foreign exchange shall be parked abroad until actual requirement in India. ix) 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 as specified by the Reserve Bank. x) 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. xi) Reporting The borrower shall adhere to the reporting procedure as specified by THE Reserve Bank from time to time. xii) Debt Servicing The designated Authorised Dealer (AD) shall have the general permis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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