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Do you want to raise funds for your business from the ECB? Connect with the team of Enterslice for External Commercial Borrowings Compliance Advisory Services. Ensure seamless compliance with RBI and FEMA regulations with the help of our experts.
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Are you planning to raise funds through External Commercial Borrowings (ECB)? Our External Commercial Borrowings Compliance Advisory Services are designed to help businesses secure commercial loans from foreign institutional investors to expand and strengthen their operations in India. Since ECBs generally offer lower interest rates compared to loans from domestic commercial banks, many companies and Public Sector Undertakings (PSUs) prefer this route for cost-effective financing.
However, availing ECB funding requires strict adherence to Indiaโs regulatory framework. The Reserve Bank of India (RBI) has recently notified the Foreign Exchange Management Regulations, 2026, introducing significant changes to the ECB framework. These amendments remove the all-in-cost ceiling on borrowings, relax certain maturity conditions, expand the list of eligible borrowers and recognized lenders, revise borrowing limits, and clarify the calculation of minimum average maturity.
Given these regulatory updates, businesses must ensure full compliance to avoid penalties and operational disruptions. At Enterslice, we offer end-to-end ECB Compliance Advisory Services, ensuring seamless structuring, documentation, reporting, and ongoing regulatory compliance. Connect with our experts today for reliable and comprehensive support.
Some of the key developments on External Commercial Borrowings (ECB) in India 2026 are as follows:
Broader Lender Eligibility
INR to Foreign Currency Conversion Permitted
Expanded Borrower Base
Liberalized End-Use Norms
Higher Borrowing Limits
Removal of All-in-Cost Ceiling
Rationalized Minimum Average Maturity Period (MAMP)
Enhanced Refinancing Flexibility
Ensure a hassle-free and fully compliant External Commercial Borrowings (ECB) process with expert ECB compliance advisory services. From structuring and documentation to RBI reporting, we help you raise funds smoothly while avoiding regulatory penalties.
A company planning to raise funds from foreign institutions through External Commercial Borrowings (ECB) must adhere strictly to the regulations framed by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA). Currently, there are two primary routes available for raising ECBs in India through external commercial borrowings compliance advisory services: the Automatic Route and the Government (Approval) Route.
Under the automatic route, eligible companies can borrow directly from recognized non-resident lenders without seeking prior approval from the RBI or the Government of India. Borrowing under this route is subject to certain prescribed limits and conditions.
The latest ECB Limits (2026 amendments) state that Companies can borrow up to USD 1 billion or 300% of their net worth, whichever is higher. The automatic route is generally preferred for companies that meet the eligibility criteria, as it allows faster and smoother access to foreign funding.
The Government (Approval) Route requires prior sanction from the Reserve Bank of India (RBI) or the concerned government authority. This route is mandatory for entities that do not qualify for the Automatic Route or wish to borrow amounts exceeding their limits. It is also required when the borrowing entity does not meet the eligibility criteria for the Automatic Route or operates in sectors that need government oversight, such as Research & Development (R&D) institutions, training institutes, Special Economic Zone (SEZ) developers, cooperative societies, Non-Banking Financial Companies (NBFCs), and banks.
By mandating government approval for large borrowings and strategic sectors, this route ensures compliance with Indiaโs financial regulations and allows for closer monitoring of critical financial activities.
Before utilizing an External Commercial Borrowing (ECB), borrowers must consider certain factors to ensure proper compliance. Availing professional external commercial borrowings Compliance Advisory Services helps borrowers leverage the full benefits of ECB loans while remaining aligned with regulatory requirements. Key advantages include:
ECB compliance in India is mandatory for all eligible borrowers. Any activities funded through an ECB must strictly follow regulatory requirements. Advisory services help borrowers understand and adhere to these rules, minimizing risks of non-compliance.
Borrowers can strategically use ECB funds for specific commercial activities permitted under regulations. Professional advisory ensures that the borrowed funds are utilized efficiently and in line with permitted purposes.
Loans compliant with ECB regulations often come with lower interest rates compared to domestic commercial loans. Foreign lenders typically offer more competitive rates than public sector banks, and proper compliance strengthens the borrowerโs eligibility for favourable terms.
ECB funds must be used strictly for the purposes mentioned in the loan agreement. Advisory services ensure that borrowers meet all end-use conditions, maintain accurate documentation, and avoid misuse of funds. It is one of the benefits of external commercial borrowings compliance advisory services.
The procedure for automatic route external commercial borrowings is covered under RBI and FEMA regulations, while ECBs can be availed through two primary routes.
The borrower must approach a designated Authorized Dealer (AD Category-I) Bank. The AD bank acts as the intermediary between the borrower and the Reserve Bank of India (RBI) for all ECB-related filings.
Before drawing down the External Commercial Borrowing (ECB), the borrower is required to obtain a Loan Registration Number (LRN) from the Reserve Bank of India (RBI). To secure the LRN, the borrower must submit Form 83 in duplicate, which must be certified by a practicing Chartered Accountant (CA) or Company Secretary (CS). The designated authorized Dealer (AD) bank then forwards the completed Form 83 to the RBI for the allotment of the LRN. It is mandatory that the borrower wait for the receipt of this LRN from the RBI before proceeding to draw down the ECB funds.
After drawing down the ECB loan, the borrower must ensure ongoing compliance by submitting a monthly ECB-2 Return. This report, certified by the designated AD bank, must reach the RBIโs DSIM department within seven working days from the end of the month. Adherence to this continuous reporting requirement is mandatory under FEMA regulations.
The step-by-step procedure for the approval route external commercial borrowings is as follows:
The borrower must submit the prescribed ECB application form along with all required documents through the designated AD bank to the RBI.
The RBI examines the application to ensure compliance with ECB guidelines, sectoral caps, borrowing limits, and end-use restrictions.
Upon satisfaction of regulatory requirements, the RBI grants approval, after which the borrower may proceed with drawdown and subsequent reporting obligations.
The timeline for completion of ECB compliance may vary depending on factors such as the nature of borrowing, lender category, sectoral restrictions, and regulatory approvals. Under our External Commercial Borrowings Compliance Advisory Services, the general timeframe is outlined below:
This stage includes eligibility assessment under the ECB framework, structuring the borrowing, conducting due diligence, and preparing documentation in accordance with RBI guidelines.
Preparation and submission of the required ECB application forms (including Form ECB) through the Authorized Dealer (AD) Bank to the Reserve Bank of India, where the approval route is applicable.
The Reserve Bank of India examines the proposal under the automatic or approval route. The timeline may vary based on regulatory queries or additional clarifications required.
After receiving approval or acknowledgment, the borrower proceeds with execution of the loan agreement and ensures compliance with prescribed ECB conditions.
Post-disbursement compliance includes obtaining the Loan Registration Number (LRN), filing Form ECB, and submitting monthly ECB-2 returns through the AD Bank.
For effective ECB Advisory Services, the following documents are essential to ensure compliance with External Commercial Borrowings (ECB) regulations set by the RBI and FEMA:
Loan Agreement: A legally binding agreement entered into between the borrower and the Authorized Dealer (AD) bank.
Loan Registration Number (LRN): A unique number obtained from the RBI before drawing down the ECB, applied for by the AD bank via Form 83.
CA/CS Certification: Mandatory verification and signing of Form 83 by a practicing Chartered Accountant or Company Secretary for LRN allocation.
ECB-2 Return: A monthly statement filed with the RBI to report all transactions, including principal and interest payments.
Form ECB: The primary application form used for the registration and reporting of the ECB arrangement.
Offer Letter: A copy of the final term sheet or offer letter from the foreign lender detailing the loan terms.
List of Goods/ Services to identify from which Classification it belongs
Import Documents: Copies of supporting trade documents like the import contract, proforma invoice, or bill of lading (if applicable).
End-Use Undertaking: A formal declaration stating that the ECB funds will be used strictly for purposes permitted under RBI regulations.
Understanding the eligibility criteria for ECB compliance is crucial for lenders and borrowers operating in India. Our external commercial borrowings compliance Advisory Services guide financial institutions and foreign investors in adhering to all regulatory requirements efficiently. The following lenders must comply with ECB regulations:
The Reserve Bank of India (RBI), in consultation with the Government of India, has liberalized the External Commercial Borrowing (ECB) framework with effect from February 16, 2026. This move aims to enable Indian companies to raise higher funds from overseas markets and improve access to global capital. The key changes introduced under the revised external commercial borrowing framework are as follows:
Check out whether you are eligible for ECB compliance advisory services for borrowers or not-
Avoid RBI penalties and FEMA risks with foreign borrowing compliance management.
With 15+ years of extensive experience in External Commercial Borrowings (ECB) advisory, regulatory compliance, and foreign funding facilitation, Enterslice offers specialized ECB Advisory Services to banks, NBFCs, educational institutions, and corporates across India.
We simplify complex ECB regulations and ensure complete compliance under the framework prescribed by the Reserve Bank of India, managing the entire process from application to reporting and audit support.
Under ECB Compliance Advisory Services, companies planning to raise funds through External Commercial Borrowings (ECB) must comply with regulations issued by the Reserve Bank of India under the Foreign Exchange Management Act. ECBs can be raised through two routes: the Automatic Route and the Government (Approval) Route. Under the Automatic Route, eligible companies can borrow up to USD 1 billion or 300% of their net worth (whichever is higher) without prior approval, subject to RBI guidelines. The Government Route requires prior approval for entities that do not qualify under the Automatic Route, exceed prescribed limits, or operate in regulated sectors such as NBFCs, SEZ developers, banks, and R&D institutions. Proper advisory ensures the selection of the appropriate route and full regulatory compliance.
ECB Compliance Advisory Services help borrowers comply with regulations set by the Reserve Bank of India while raising External Commercial Borrowings. They ensure proper documentation, eligibility compliance, and timely reporting. These services also support efficient fund utilisation, adherence to end-use norms, and improved credibility with foreign lenders, helping businesses access cost-effective overseas funding with minimal regulatory risk.
The procedure for External Commercial Borrowings (ECB) is governed by the Reserve Bank of India under the Foreign Exchange Management Act and can be availed through the Automatic or Approval Route. Under the Automatic Route, the borrower must first approach a designated Authorized Dealer (AD Category-I) Bank for processing. Before drawing funds, a Loan Registration Number (LRN) must be obtained by submitting Form 83 (certified by a CA or CS) through the AD Bank to the RBI. After a drawdown, the borrower is required to file monthly ECB-2 returns, duly certified by the AD Bank, to ensure continuous regulatory compliance.
Under ECB Advisory Services, certain key documents are required to ensure compliance with the ECB framework prescribed by the Reserve Bank of India and FEMA regulations. These include the loan agreement between the borrower and the AD bank, the Loan Registration Number (LRN) obtained through Form 83, and the CA/CS certification for LRN allocation. Borrowers must also file the monthly ECB-2 return reporting principal and interest payments, along with Form ECB for registration and reporting. Additional documents such as the lenderโs offer letter, relevant import documents (if applicable), and an end-use undertaking confirming permitted utilization of funds are also required.
Foreign lenders and investors in India must follow ECB regulations. This includes international banks, borrowings through global capital markets, and multilateral institutions like IFC, ADB, and CDC. Export credit agencies, foreign equipment suppliers, collaborators bringing in capital, and all foreign equity holders (except erstwhile OCBs) are also required to comply, ensuring all cross-border financing adheres to ECB norms.
The Reserve Bank of India (RBI), in consultation with the Government, has liberalized the External Commercial Borrowing (ECB) framework effective February 16, 2026, to help Indian companies access higher overseas funds. Key changes include an increased annual borrowing limit from USD 750 million to USD 1 billion or 300% of net worth, revised maturity norms allowing manufacturing firms to raise ECBs with 1โ3-year tenures, and an expanded borrower and lender base, including companies under restructuring. The previous pricing cap of 450 basis points over benchmark rates has been removed, enabling market-determined interest rates, while end-use restrictions have been eased for land acquisition, company control, and on-lending, though real estate lending remains restricted.
Companies eligible for External Commercial Borrowings (ECB) include manufacturers, SEZ units, infrastructure and holding companies, shipping and airline companies, and NBFCs. REITs, InvITs, microfinance institutions, NGOs involved in microfinance, and entities offering R&D, training, logistics, or infrastructure support also qualify. Additionally, developers of SEZs or National Manufacturing and Investment Zones (NMIZs) fall under the ECB framework.
Restricted end uses under External Commercial Borrowings (ECB) are specific activities for which ECB cannot be utilized as mandated by the RBI. Such that Borrowed funds cannot be used in India for chit funds, Nidhi companies, general real estate or farmhouse construction, most agriculture/animal husbandry (except controlled floriculture, horticulture, seed production, aquaculture, apiculture), plantations other than tea, coffee, rubber, cardamom, palm oil, and olive oil, trading TDRs, or investing in securities except for strategic corporate actions. Funds also cannot repay domestic loans taken for restricted purposes or NPAs, nor can they be on-lent for prohibited uses.
ECB, which stands for External Commercial Borrowings, are loans raised by Indian companies from foreign lenders in the form of commercial loans, buyers' credit, suppliers' credit, or securitized instruments. Indian corporates and certain institutions recognized by the RBI are eligible to borrow. While this service can be available to international banks, multilateral financial institutions, foreign equity holders and other recognized lenders.
Foreign Direct Investment (FDI) is an equity investment made by a foreign entity into a business, venture, or organization. Essentially, it represents ownership in the company. External Commercial Borrowings (ECB), on the other hand, are loans or debt funding provided by foreign lenders or institutions to Indian companies. ECBs usually offer lower interest rates than domestic loans, making them a cost-effective way to raise capital.
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-- Testimonials
โEnterslice simplified our ECB compliance process with expert guidance and timely support. Their professional approach ensured smooth approvals without delays or confusion. Highly recommended service.โ
Verified Customer
โThe team handled our ECB documentation and reporting seamlessly. Their deep regulatory knowledge saved us time and prevented compliance risks throughout the borrowing process.โ
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