Net ECB inflows surge over 2x to $18.4 billion in 10MFY25: RBI data

ECB outflows due to principal repayments stood at $23.9 billion during the April 2024-January 2025 period, resulting in robust net inflows of $18.4 billion

Net inflows from External Commercial Borrowings (ECBs) more than doubled to $18.4 billion in the April 2024 to January 2025 period, compared to a year ago, amid declining costs of overseas fund raise, according to Reserve Bank of India (RBI) data.

 

ECB registrations of $47.3 billion and disbursements of $42.3 billion from April 2024 to January 2025, on a cumulative basis, were significantly higher than those recorded in the corresponding period previous year.

 

ECB outflows due to principal repayments stood at $23.9 billion in the April 2024 to January 2025 period, resulting in robust net inflows of $18.4 billion — more than twice the level observed in the same period previous year, according to a State of Economy article in RBI bulletins published this month.

 

The net net inflows under ECBs were $9.5 billion in 2023-24 (FY24), substantially higher than the levels recorded in 2022-23 (FY23).

 

The article observed that the continued decline in the secured overnight financing rate (SOFR) since August 2024 has contributed to a reduction in the overall cost of ECBs. In January, the overall cost of ECBs declined by 129 basis points (bps), compared with the corresponding period of the previous year.

 

Since March 2024, global benchmark interest rates, such as SOFR, have declined up to 85 bps, reducing the overall cost of ECBs by 25 bps from April to December 2024, according to an RBI assessment in February.

 

The weighted average margin for interest rates over the reference rate declined to 0.98 per cent in January from 1.33 per cent in January 2024.

 

However, the situation in the market has changed now with a rise in volatility, change in risk perceptions in the backdrop of a host of new policies, including trade policies adopted by US President Donald Trump, analysts said.

 

Of the total ECBs registered in the April 2024-January 2025 period, $6.7 billion was for modernisation, new projects and infrastructure development, as against $10.5 billion in the April 2023-January 2024 period.

 

Registrations for import/local sourcing of capital goods amounted to $3.7 billion in the April 2024-January 2025 period, down from $10.3 billion a year ago. Those for refinancing old ECBs and rupee loans were $9.3 billion for the April 2024-January 2025 period, up from $5.3 billion in the April 2023-January 2024 period.