Net ECB inflows moderate to $8 bn in Apr-Sep as registrations decline

Net ECB inflows eased to $8 bn in April-September 2025 as borrowings fell yoy, but inflows still exceeded outflows, prompting RBI to adjust norms amid a strong external sector

The net inflows through external commercial borrowings stood at $8.0 billion in April–September 2025 (H1FY26), down from over $9 billion during H1FY25, according to Reserve Bank of India data.

 

The registrations of external commercial borrowings (ECBs) declined to $18.5 billion during April–September 2025 from close to $25 billion in April–September 2024 (H1FY25). Despite the slowdown, inflows continued to outpace outflows. Notably, 45 per cent of the total ECBs registered during this period were raised for capital expenditure, said the State of Economy report in RBI’s Bulletin (November).

 

What do the September 2025 ECB trends show?

 

As for September 2025, the ECB registrations stood at $2.8 billion and net inflows were $2.2 billion. The corporates filed 127 ECB registrations through the automatic route for an amount worth $2.4 billion compared to 95 registrations amounting to $3.8 billion a year ago.

 

The interest rate — weighted average margin over alternative reference rate (ARR) — for floating rate ECB loans was 1.27 per cent in September 2025, down from 1.36 per cent in September 2024, RBI data showed.

 

Why has the RBI proposed changes to the ECB framework?

 

RBI recently mooted a revision in ECB norms against the backdrop of a strong external sector. Early this month, governor Sanjay Malhotra, speaking at SBI’s banking and economics conclave, had said the recalibration of the ECB framework is a natural step in India’s financial evolution. It was grounded in strong fundamentals, guided by prudence, and inspired by confidence in the economy’s capacity to engage with global finance on its own terms, Malhotra said.

 

What will the revised framework aim to achieve?

 

The removal of all-in-cost ceilings will encourage competitive rates and promote prudent hedging behaviour. Expansion of the universe of eligible lenders will improve pricing efficiency.

 

Linking the borrowing limits to the borrower’s net worth under the automatic route links ECB to the strength of the borrower, while enhancing ease of doing business. This limit and the overall soft ceiling of total outstanding ECBs at 6.5 per cent of GDP will mitigate the risks of excessive external leverage, RBI added.