**Summary:**
This circular, issued by the Reserve Bank of India (RBI) on June 7, 2018 (A. P. DIR Series Circular No. 29), modifies the reporting requirements for External Commercial Borrowings (ECBs) through the ECB 2 Return. It specifically amends Part E of the ECB 2 Return to capture details of ECB hedges in a simplified format. The revised format focuses on standard information regarding hedged/unhedged ECB exposure, including details on financial and natural hedges. Banks are required to furnish details of hedging in Part E.1 and foreign exchange earnings/expenditure in Part E.2 in an additive format, adhering to the provisions for natural hedges as outlined in A.P. DIR Series Circular No. 15 dated November 07, 2016. The revised monthly reporting format is effective from the end of June 2018. The circular reiterates that any lapses in reporting, failure to adhere to submission timelines, or errors in Form 83 constitute a contravention of the Foreign Exchange Management Act, 1999 (42 of 1999). AD Category I banks are instructed to inform their constituents and customers of these changes. The Master Direction No. 18 dated January 01, 2016, is being updated to reflect these modifications. This directive is issued under sections 10(4) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999). The amended E block in ECB2 Return includes sections for: E.1 Hedging details which asks for Outstanding Financial hedges, Natural hedge, Annualized percentage cost of financial hedges for ECB as on the last date of the reporting month and E.2 Foreign exchange earnings and expenditure, if any, for the last three financial years only corresponding to same currency of ECB. Contact person for clarifications is Ajay Kumar Misra, Chief General Manager.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and managing the country's monetary policy.
External Commercial Borrowings: A mechanism used in India to facilitate access to foreign money by Indian corporations and PSUs.
Authorised Dealer Category I banks: Banks authorized by the Reserve Bank of India to deal in foreign exchange.
Master Direction No.18/2015-16: A set of comprehensive guidelines issued by the Reserve Bank of India pertaining to reporting requirements under the Foreign Exchange Management Act, 1999.
Foreign Exchange Management Act, 1999: An Act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
ECB 2 Return: A monthly reporting format for External Commercial Borrowings, used to capture details of ECBs, including hedging information.
A.P. DIR Series Circular No. 15 dated November 07, 2016: A circular issued by the Reserve Bank of India related to reporting requirements and guidelines for Authorised Dealers concerning foreign exchange matters.
Ajay Kumar Misra: Chief General Manager at Reserve Bank of India
भारतीय �रज़व र् ब�क
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2017-18/193
A. P. (DIR Series) Circular No. 29 June 7, 2018
To
All Category I Authorised Dealer Banks
Madam / Dear Sir
External Commercial Borrowings (ECBs) – Monthly reporting through ECB 2 Return
Attention of Authorized Dealer Category I (AD Category I) banks is invited to Annex III of Part V
of Master Direction No.18/2015-16 dated January 01, 2016 on Reporting under Foreign
Exchange Management Act, 1999, as amended from time to time. The said Master Direction,
inter alia, stipulates the reporting arrangement for ECBs through ECB-2 Return.
2. It has been decided to capture the details of the hedges for ECBs through a simplified format
of ECB 2 Return. Part E of the Return, accordingly, is modified so as to include only standard
information on hedged/unhedged ECB exposure (Annex). Details of hedging in Part E.1 of the
Return and foreign exchange earnings and expenditure in Part E.2 of the Return should be
furnished in additive format. Further, for reporting in respect of natural hedge, provisions
contained in paragraph 2 (iii) of A.P. (DIR Series) Circular No. 15 dated November 07, 2016
should be followed.
3. Revised monthly reporting format of ECB 2 Return would be applicable from month-end June
2018. It is reiterated that any lapse at the time of reporting through this return and / or failure
to adhere to the time line of its submission and / or any lapse at the time of reporting through
Form 83 is a contravention of the provision of Foreign Exchange Management Act, 1999 (42 of
1999).2
4. AD Category - I banks may bring the contents of this circular to the notice of their
constituents and customers. The aforesaid Master Direction No. 18 dated January 01, 2016 is
being updated to reflect the changes.
5. The directions contained in this circular have been issued under sections 10(4) and 11(2) of
the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
Yours faithfully
Ajay Kumar Misra
Chief General ManagerAnnex
Amended E block in ECB-2 Return
E.1 Hedging details:
Outstanding Financial hedge(s) Natural hedge Annualised
Principal Notional % of Notional % of percentage cost
Currency
ECB amount value outstanding value outstanding of financial
(in million)* (in million) ECB amount (in million) ECB amount hedge(s) for ECB
*as on the last date of the reporting month
E.2 Foreign exchange earnings and expenditure, if any, for the last three financial years (only
corresponding to same currency of ECB):
Foreign Currency
Foreign Currency Annual EBID**
Financial Year Currency expenditure
earnings (in million) (in INR million)
(in million)
**Earnings before Interest and Depreciation (EBID), as defined table above = Profit After Tax +
Depreciation + Interest on debt + Lease Rentals, if any.