The Reserve Bank of India (RBI) is planning to make it easier for Indian companies to borrow abroad through external commercial loans (ECB).
In the works, a revised ECB framework that provides for the expansion of the eligible borrower and recognized lenders base, rationalization of loan limits and rationalization of restrictions on average term period.
The revised framework also includes the removal of restrictions on the costs of borrowing for ECBs, assessing end use restrictions and simplification of reporting requirements.
ECBs are commercial loans that are granted by eligible entities of recognized non-resident entities and must conform to parameters such as minimal adulthood, permitted and unpacked ends, maximum comprehensive ceiling, etc.
RBI said that it has taken an evaluation of the existing provisions under the rules for currency management (Loan and Lending), 2018, with the aim of rationalizing and simplifying the regulations for ECBs.
In the background of flows to the commercial sector of non-banking sources, this is more than compensating for the fall in the streams of the banking sector.
RBI Governor Sanjay Malhotra noted that the total flow of non-banking sources to the commercial sector in 2025-26 so far has increased by £ 2.66 Lakh Crore, more than compensating for the decrease in non-food bank credit by £ 48,000 crore.
ECBs can currently be done in any freely convertible foreign currency (FCY) or Indian Rupee (INR).
Under FCY, the eligible borrowers include all entities that are eligible to receive DBI. Furthermore, the entities such as port confidence; Units in SEZ; Sidbi; And Exim Bank of India are also eligible to increase ECB.
Under INR, the eligible borrowers include all eligible entities to retrieve FCY ECB. Furthermore, registered entities involved in micro-financing activities, namely not registered for profit companies, registered societies/ trusts/ cooperatives and non-governmental organizations are also eligible to increase INR ECB.
According to the latest RBI data, while the total number of ECB registrations (under the automatic and approval routes) fell to 113 in June 2025 from 125 in the period of the year ago, the increased amount was higher at $ 3,483 billion against $ 2.816 billion.
Published on October 1, 2025
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