BUYBACK / PREPAYMENT OF FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The existing policy on the premature buyback of FCCBs has been reviewed and it has been decided to liberalise the procedure and consider applications for buyback of FCCBs by Indian companies,
both under the automatic and approval routes, as detailed here under:

Automatic Route: 

• the buyback value of the FCCB shall be at a minimum discount of 15 per cent on the book value;
• the funds used for the buyback shall be out of existing foreign currency funds held either in India (including funds held in EEFC account) or abroad and / or out of fresh ECB raised in conformity with the current ECB norms; and
• where the fresh ECB is co- terminus with the outstanding maturity of the original FCCB and is for less than three years, the all-in- cost ceiling should not exceed 6 months Libor plus 200 bps, as applicable to short term borrowings. In other cases, the all-in-cost for the relevant maturity of the ECB, as laid down in A. P. (DIR Series) No.26 dated October 22, 2008 shall apply.