RBI to issue draft framework easing ECB norms, widens eligibility scope

RBI will release a draft framework to simplify ECB rules with wider borrower and lender eligibility, relaxed limits, eased reporting, and extended IFSC repatriation timeline

The Reserve Bank of India will release a draft of a revised framework for External Commercial Borrowings (ECBs) aimed at simplifying and easing existing regulations, Governor Sanjay Malhotra announced on Wednesday. The proposed framework includes expanding the scope of eligible borrowers and recognised lenders, relaxing borrowing limits and maturity requirements, removing cost restrictions, reviewing end-use norms, and simplifying reporting processes.

 

“With an objective to rationalise and simplify the regulations governing External Commercial Borrowings (ECB), the Reserve Bank of India has undertaken a review of the existing provisions under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. Based on the review, a revised framework that provides for expansion of eligible borrower and recognized lender base, rationalization of borrowing limits, rationalization of restrictions on average maturity period, removal of restrictions on the cost of borrowing for ECBs, review of end-use restrictions and simplification of reporting requirements, is proposed to be introduced. The draft Framework will be issued shortly,” the RBI said.

 

Separately, the RBI extended the repatriation timeline to three months for such accounts maintained with IFSC Banking Units in India. The move is expected to encourage exporters to use IFSC accounts and enhance foreign exchange liquidity within the International Financial Services Centre. The necessary regulatory amendments will be notified shortly.

 

In January 2025, the RBI allowed Indian exporters to open foreign currency accounts with banks outside India for the realisation of export proceeds. Funds held in these accounts could be used for import payments or were required to be repatriated within one month from the date of receipt.