Reserve Bank of India (RBI) released the updated guidelines on ECBs through Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026.
- RBI has made amendments to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 by exercising power conferred under the Foreign Exchange Management Act, 1999.
About ECB
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ECB Framework
- Eligible borrowers: Any non-individual resident entity incorporated under central or state law is now eligible to raise overseas loans, subject to statutory permissions.
- Increased Borrowing Limits and Maturity
- Higher Caps: Eligible companies can now raise ECBs of up to $1 billion or 300% of their net worth.
- Maturity Periods: The general minimum average maturity period is set at three years.
- Borrowers in the manufacturing sector are permitted a shorter average maturity period of 1 to 3 years under certain conditions.
- Conversion of ECB into non-debt instrument: An ECB (including those which is matured but unpaid) may be converted into a non-debt instrument, subject to compliance with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
- Arm’s length principle: ECB from a related party shall be carried out on an arm’s length basis.
- Arm’s length principle means a transaction between two related parties that is conducted as if the transacting parties were unrelated, so that there is no conflict of interest.
- End-Use Restrictions: ECB funds cannot be used for: Chit funds or Nidhi companies, Stock market investments, etc
