The Reserve Bank of India (RBI) on 1st August, 2022 issued a circular clarifying the terms under which eligible ECB borrowers are allowed to raise External Commercial Borrowings (ECB) up to USD 750 million or equivalent per financial year under the automatic route.
In accordance with the measures relating to ECBs undertaken to enhance forex inflows while ensuring overall macroeconomic and financial stability, the RBI has decided, in consultation with the Central Government, to:
i) increase the automatic route limit from USD 750 million or equivalent to USD 1.5 billion or equivalent.
ii) increase the all-in-cost ceiling for ECBs, by 100 bps. 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, as it existed before.
These relaxations will apply to AD Category-I banks, their constituents and customers, for ECBs to be raised till December 31, 2022. Necessary amendments have also been made to the Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2022 to give effect to these changes.
