RBI Issues Liberalisation Measures – External Commercial Borrowings (ECB) Policy

External Commercial Borrowings (ECB) Policy

On 01st August 2022, the Reserve Bank of India (RBI) issued a Notification
concerning the “External Commercial Borrowings (ECB) Policy”, stating the
adoption of Liberalisation Measures. In accordance with paragraph 2.2 of FED Master Direction No.5 on External Commercial Borrowings, Trade Credits and Structured Obligations, which was issued on 26th March 2019, the terms set were that the eligible ECB burrows are permitted to raise the ECB amount for up to USD 750,000,000 (750 Million) or equivalent for each financial year in accordance with the automated route, along with Paragraph 2.1.vi. ibid, which specifies the all-in-cost ceiling for ECBs.

In Paragraph 5 of the Press Release of “Liberalisation of Forex Flows” issued on 06th July 2022, with the consultation of the Central Government, it is declared that,

  • An increase of the Automated Route Limit is to be implemented from USD 750 million or equivalent to USD 1.5 billion or equivalent.
  • An increase of the all-in-cost ceiling for ECBs, by 100 bps is to be implemented. This enhanced all-in-cost ceiling is declared available only for eligible borrowers of the investment grade rating from Indian Credit Rating Agencies (CRAs). Other eligible borrowers are to raise ECB within the existing all-in-cost ceiling, as hitherto.

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