PROFESSIONAL NEWS

• Exchange Earners’ Foreign Currency (EEFC) Account Scheme

  As a measure of relaxation to the EEFC Account Scheme, it has been decided to remove the ceiling of USD 3 million. Accordingly, it will be in order for authorized dealers to permit their exporter constituents to extend trade related loans/ advances to overseas importers out of their EEFC balances without any ceiling. This relaxation shall be effective upto June 30, 2003, subject to review. (Circular No. A.P. (DIR Series) Circular No. 78 Dated 14.02.2003)

• Current Account Transactions Remittance for Advertisement on Foreign Television

  With a view to simplifying the procedure, it has been decided as under:- i) A Chartered Accountant’s certificate, for export earnings of more than Rs. 10 lakhs, in each of the preceding two years, need not be insisted in case of export earnings prescribed (i.e. minimum Rs. 10 lakhs in each of the previous two years), have been realized through the same authorized dealer, through whom the remittance is sought to be made. ii) A Chartered Accountant’s certificate should, however, be obtained certifying that the remittance represents advertisement charges incurred by the Corporate towards telecast in foreign countries and not in India alone. The certificate will have to be obtained for each remittance. (Circular No. A.P (DIR Series) Circular No. 77 Dated 10.02.2003) Up gradation of loan accounts classified as Non Performing Assets (NPAs). Banks have been advised that they should strictly adhere to RBI’s instructions on asset classification to avoid inconvenience to borrowers. However, the extent instructions in respect of reclassification of loan accounts subjected to restructuring would remain unchanged. (Notification No. DBOD. No. BP.BC.69/21.04.048/2002-2003).

• Government Allows Indian Companies To Prepay Existing FCCBs

  With a view to further liberalizing the ‘Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism), 1993’ the Government has decided to allow Indian companies to prepay the existing Foreign Currency Convertible Bonds (FCCB) subject to the following conditions: - a) This provision of pre-payment (premature purchase) of existing FCCBs will be available upto 30th September, 2003. The existing condition of minimum maturity period for redemption of bonds (i.e. 5 years) is put on hold till 30th September, 2003. b) The initiation power/right to prepayment is vested with the issuer of Bonds and not with the holder of bonds. However, the actual prepayment is subject to the consent of the holder of the bond. c) The pre-payment should be at most the face value of bonds and not exceeding the face value (inclusive of all expenses for such buyback). d) The bonds purchased from the holders must be cancelled and should not be re-issued or re-sold. e) The funds resources for making such prepayment by the Company shall not be by resorting to fresh external debt. f) This prepayment scheme of FCCBs will not have any effect on the bondholders of Indian Companies not opting this window or on the non-participating bondholders of Indian companies opting this window. This scheme is available under automatic route upto a limit of US $ 100 million if the prepayment is made out of local resources and without any limit if prepayment is out of EEFC (Exchange Earner Foreign Currency) funds or inward remittances towards equity subject to the fulfilling of the conditions mentioned in para 2 of this guideline. After completing the transactions, the companies would be required to furnish full particulars thereof including the number of bonds repurchased (i.e. prepaid), the rate of repurchase (including expenses, if any), the number of residual bonds, source of funds to the Ministry of Finance, Department of Economic Affairs and the Exchange Control Department of the Reserve Bank of India, Central Office, Mumbai within 30 days of completion of such transactions. All transactions under this scheme shall be performed on or before 30th September, 2003.