(i) Short term foreign currency loans/credits with maturities less than three years for the purpose of financing imports into India do not require prior clearance from Government of India. Applications for raising such loans/credits should be made in form ECB 4 through an authorised dealer to the Chief General Manager, Exchange Control Department, Central Office (IMD-II), Reserve Bank of India, Mumbai 400 001. The proposals shall be considered by Reserve Bank on merits of each case and in the light of prevailing policy.

(ii) In approved cases, Reserve Bank will issue a letter of approval indicating the terms and conditions under advice to the concerned authorised dealer. The borrowers, should thereafter, report the details of drawals, utilisation, repayments and outstandings under the foreign currency loan/credit in respect of each approval granted by Reserve Bank, every month in form ECB 5, (in duplicate); one copy of ECB 5 alongwith the Annexure thereto duly duly countersigned by the concerned authorised dealer and supported by a complete set of documents such as Exchange Control copy of the import licence/s [where applicable], original invoice and Exchange Control copy/ies of Bill/s of Entry for home consumption evidencing import of goods for which the loan/credit was obtained should be submitted to the concerned Regional Office of Reserve Bank, and another copy without the Annexure/documents should be submitted to the Chief General Manager, Exchange Control Department, (IMD), Reserve Bank of India, Central Office, Mumbai 400 001, by the 10th of the month following the month to which it relates. In case the loan/credit has not been drawn, a "NIL" statement in form ECB 5 should be submitted. In the event of default in timely submission of the statement in form ECB 5, the borrowers shall be liable for such action as may be deemed necessary by Reserve Bank under FERA, 1973.

(iii) Authorised dealers may allow remittances towards loan instalments and interest strictly in accordance with the terms and conditions indicated in the letter of approval issued by Reserve Bank. For this purpose, the borrower should make an application to authorised dealer on form A2.