In a significant regulatory tweak, the Reserve Bank of India (RBI) has eased overseas borrowing norms. It did so by revamping the External Commercial Borrowing (ECB) framework.
On Monday, 16th February, the central bank notified the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026. This followed a review of stakeholder feedback on the earlier draft rules.
The changes widen the pool of eligible borrowers and recognised lenders. They also revise borrowing limits and minimum average maturity norms. In addition, they remove the cap on all-in-cost or interest expenses for ECBs.
The RBI has also relaxed end-use norms. ECB funds can now be used for the acquisition of control and for the purchase of land and immovable property, subject to conditions. Moreover, RBI-regulated entities are allowed to on-lend ECB funds to individuals, though purpose-based restrictions remain in place.
In addition, the central bank has provided clarity on the treatment of convertible instruments, foreign venture capital investments in debt securities, refinancing norms, and the computation of Minimum Average Maturity. Reporting requirements have been simplified. Also, the earlier requirement for Authorised Dealer banks to assess whether borrowing costs align with market conditions has been removed.
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