RBI Adopts Liberalisation Measures – External Commercial Borrowing (ECB) Policy

The Reserve Bank of India has brought temporary liberalisation measures to ‘enhance forex inflows while ensuring overall macroeconomic and financial stability which will be in force for ECBs raised till December 31, 2022, vide A.P. (DIR Series) Circular No. 11 dated August 01, 2022. The Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations has also been amended as of August 01, 2022, to reflect the temporary liberalisation measures.

The liberalisation measures are:

(i) increase in automatic route limit from USD 750 million or equivalent per financial year to USD 1500 million or equivalent per financial year, for ECBs raised till December 31, 2022; and

(ii)  increase in All-in-Cost Ceiling by 100 bps for ECBs raised till December 31, 2022. The enhanced all-in-cost ceiling shall be available only to eligible borrowers of investment grade rating from Indian Credit Rating Agencies (CRAs). Other eligible borrowers may raise ECB within the existing all-in-cost ceiling.