External Commercial Borrowings (ECB) Policy – Liberalisation Measures
The Reserve Bank of India (RBI) had vide Press Release dated July 6, 2022, mentioned that, it has been decided to undertake measures listed to enhance forex inflows while ensuring overall macroeconomic and financial stability. The RBI had further stated in the same press release that it has been decided to temporarily increase the limit under the automatic route from US$ 750 million.
In subsequent to the same the RBI had released a notification on August 1, 2022 to;
- increase the automatic route limit from USD 750 million or equivalent to USD 1.5 billion or equivalent.
- 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 hitherto.
Important caveats:
- The above relaxation is only available for ECBs to be raised till December 31, 2022.
- The liability to Equity Ratio for ECB raised from direct foreign equity holders under the automatic route is still 7:1
- The aforementioned ratio will not be applicable if the total of all ECBs raised by an entity is up to USD 5 million or equivalent
