The RBI requested public feedback on the draft circular by 24 October. Photocredit: Francis Mascarenhas
The Reserve Bank of India launched Today Draft External Commercial Leening (ECB) Framework to illuminate the overseas fundraising plans of borrowers. The supervisor has increased the limit of ECBs that companies can increase, limits in connection with the financial strength of borrowers in connection with borrowers and suggested that ECBs must be increased at the market determined rates.
One of the core proposal is to enable companies up to $ 1 billion or 300 percent of the net value, depending on which higher, to replace the earlier $ 750 million limit that borrowers could increase via ECB route without prior RBI approval. The RBI requested public feedback on the draft circular by 24 October.
The RBI said that eligible borrowers will only increase the ECB with a minimum average duration period (MAMP) of three years. Any eligible borrower who deals with the production sector can increase the ECB with an average duration between one year and three years, subject to the condition that outstanding shares of such ECBs do not amount to more than $ 50 million. Also, if applicable, you do not call before Mamm is completed.
The supervisor also suggested to abandon the interest rate determination, which means that the costs of loans are in line with the prevailing market conditions, in contrast to the previous ceiling of a global benchmark, plus 450 basic points (BPS).
“In the event that ECBs with an average duration period of less than three years the costs of loans are also in accordance with a cost ceiling specified for trade credit in these regulations. In the case of a fixed rate, the swap costs plus spread should not be more than the ceiling,” said the RBI’s costs are not to be used.
“The Rbi’s Draft Framework is a clear shift from a prescriptive, one-size-fits-all approach to a more nuanced and market-linked ecb regime. By linking borrowing limits to the financial strength of the borrower and moving away from rated cost corpor Greater Flexibility to Access Global Capital at Competitive Rates, ”Said Venkatakrishnan Srinivasan, Founder and Managing Partner, Rockfort Fincap LLP.
The RBI also broadened the net of eligible borrowers from ECB and said that a borrower is under a restructuring schedule or a process for the resolution of the insolvency of corporate venting can only increase if it is specifically permitted under the restructuring or resolution plan.
An eligible borrower against whom investigation is being processed by the legal enforcement agencies can also increase ECB, despite the ongoing investigation. However, the borrower will reveal information about the pending investigation or the arbitration or an appeal to their designated gender.
Published on October 3, 2025
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