Furthermore, a borrower under a restructuring scheme or corporate insolvency resolution process can use this route to raise money.
The move comes at a time when Indian financial markets are seeing outflows amid geopolitical uncertainties and global trade fragmentation. This in turn weakens the rupee. But the liberalized ECB norms could push India Inc to tap foreign markets and bring in dollars, thereby stabilizing the rupee.
ECBs are commercial loans made by eligible resident entities from recognized non-resident entities. These loans must meet parameters such as the minimum term, the permitted and unauthorized end use, the maximum all-in cost ceiling, etc.
An eligible borrower can increase the ECB to the highest outstanding ECB amount, up to a maximum of USD 1 billion; or total outstanding loans (external and domestic) up to 300 percent of net assets as per the borrower’s last audited stand-alone balance sheet.
There are no ceilings on the costs of borrowing. The cost of borrowing should be in line with prevailing market conditions.
However, in the case of eligible ECBs with an average maturity of less than three years, the cost of borrowing will be in accordance with the cost ceiling specified for trade credit under these regulations. In the case of fixed rate loans, the variable rate plus the spread of the corresponding swap may not exceed the ceiling.
Any prepayment costs or any penalty interest due to default or violation of covenants must be in accordance with prevailing market conditions.
RBI said ECBs can be secured by collecting charges on immovable assets, movable assets, financial assets and intangible assets (including intellectual property rights) in favor of the non-resident lender or security trustee; and issuing a guarantee in favor of the lender or security manager in accordance with the Foreign Exchange Management (Guarantees) Regulations, 2026, subject to conditions.
The RBI has expanded the list of eligible borrowers to include a borrower against whom an investigation, adjudication or appeal by a law enforcement agency is pending for violation of any rule, regulation or direction promulgated under the Act.
Such borrowers may appeal to the ECB notwithstanding any ongoing investigation, ruling or appeal and without prejudice to the outcome of any such investigation, ruling or appeal. However, the borrower will make public information about the ongoing investigation, ruling or appeal.
An eligible borrower can collect the ECB from – a person residing outside India; a branch outside India of an entity whose lending activities are regulated by RBI; and a financial institution or a branch of a financial institution incorporated in IFSC.
While an eligible borrower can withdraw ECB in Foreign Currency (FCY) or Indian Rupee (INR), the currency of such loan can be changed from one FCY to another FCY, from an FCY to INR and from INR to an FCY.
An eligible borrower will increase the ECB with a minimum average term of three years.
Published on February 16, 2026
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