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& !c&!c ))*cdefines FCCB to mean bond issued in accordance with this scheme &
subscribed by a non-resident in foreign currency & convertible into ordinary shares of the issuing
company in any manner either in whole or in part, on the basis of any equity related warrants attached
to the debt instrument

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FCCBs mean a bond issued by an Indian company expressed in foreign currency, and the principal and
interest in respect of which is payable in foreign currency. Further, the bonds are required to be issued
in accordance with the Depository Receipt Scheme, 1993͟, and subscribed by a non-resident in foreign
currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or
in part, on the basis of any equity related warrants attached to debt instruments

FCCB issue under Automatic Route

£c Adhere FDI policy and sectoral caps

£c Corporate (other than hotels, hospitals & software sectors) can raise
FCCB upto USD 500 million in one financial year

£c Corporate in hotels, hospitals & software sectors can raise FCCB upto
USD 100 million in one financial year for meeting foreign currency
&/or rupee capex for permissible end uses. Acquisition of land not
permitted

£c -ublic issue of FCCBs shall be through reputed lead managers

£c -rivate placement is permitted subject to certain conditions

Eligible Borrowers

£c Corporate registered under Companies Act, 1956

 £c Units in SEZ

£c Infrastructure Finance Companies up to 50% of their owned funds subject

to compliance with prudential guidelines (already availed ECBs under
erstwhile approval route to be included in this cap)

Non-eligible Borrowers

£c Financial Intermediaries like banks, FIs, NBFCs, Housing finance companies

£c Individuals

£c Yrusts

£c Non profit making organizations

Recognized Lenders

£c International Banks

£c International capital markets

£c multilateral financial institutions like IFC, ADB, CDC etc.

£c Export credit agencies

£c Suppliers of equipments

£c Foreign collaborators

£c Foreign equity holders, with minimum equity holding in the borrower:

£c Êor ECB < or = USD 5 Million- Min. equity of 25% held directly by the
lender,

£c Êor ECB > USD 5 Million- Min. equity of 25% held directly by the
lender AND debt-equity ratio not exceeding 4:1 (i.e. the proposed ECB
not exceeding 4 times of the direct foreign equity holding)
Use of -roceeds : -ermissible

oc For import of capital goods, new projects, modernization/expansion of

existing production in real sector-industrial sector, infrastructure sector &
specific service sectors - hotels, hospital & software in India. Yhe definition
of Infrastructure sector has been amended to include ͞cold storage or cold
room facility, including for farm level pre-cooling, for preservation or
storage of agricultural and allied produce, marine products and meat.͟

oc pverseas acquisitions, overseas direct investment in JV/WpS

oc -ayment for obtaining license/permit for 3G Spectrum, (the initial payment

may be met out of rupee resources, which could be refinanced with a long
term FCCB under approval route subject to certain conditions)

oc For first stage acquisition of shares in disinvestment process & also in

mandatory second stage offer to public under government͛s disinvestment
programme of -SU shares

oc Existing FCCBs may be refinanced by raising fresh FCCB provided fresh FCCB
is raised at a lower all-in-cost and outstanding maturity of the original FCCB
is maintained

Use of -roceeds: Not -ermissible

oc For on-lending or investment in capital markets

oc For acquiring a company or part thereof in India by a corporate

oc Real Estate

oc Working Capital
 oc General Corporate purpose

oc Repayment of existing rupee loans

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oc Choice of security to be provided to lender is left to the discretion of
borrower. Generally, security is created by creating a charge on immovable
assets, or financial assets or by giving corporate/personal guarantee and
AD͛s no objection is required for creation of security in all the above
mentioned 3 cases.

oc Authorised Dealer͛s duty is to ensure:

1)c Compliance of ECB Guidelines

2)c Security clause in the loan agreement

3)c Duly executed loan agreement

4)c Loan regn. number from the RBI