RBI proposes easing ECB norms: Flexible limits, relaxed rules, wider access for India Inc borrowing

The Reserve Bank of India (RBI) has proposed a significant easing of rules for External Commercial Borrowings (ECBs), aimed at making overseas fundraising simpler and more attractive for Indian companies. The draft framework, issued on October 3, 2025, seeks to rationalise the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 under FEMA, 1999.

The announcement follows the RBI’s Statement on Developmental and Regulatory Policies made on October 1. The central bank said the revisions were designed to improve credit flows to corporates while cutting down on unnecessary compliance requirements.

Key proposals

The draft framework highlights four major changes:

Borrowing limits tied to financial strength: Instead of a uniform borrowing cap, companies will be allowed to raise ECBs based on their financial health, giving stronger firms greater flexibility.

Market-determined interest rates: Loan pricing will be liberalised, allowing borrowers and lenders to negotiate rates aligned with market conditions.

Simplification of end-use and maturity rules: Restrictions on how funds can be deployed, along with minimum average maturity periods, will be relaxed to provide companies more freedom in utilisation.

Expansion of borrower and lender base: The pool of eligible participants on both sides of ECB transactions will be widened, opening the door for more firms and institutions to take part.

In addition, the RBI has proposed simplifying reporting requirements to reduce compliance burdens — a long-standing demand of India Inc.

Industry implications

If finalised, the changes are expected to help Indian corporates diversify funding sources, tap cheaper credit overseas, and reduce reliance on domestic borrowing. Analysts say infrastructure, manufacturing, and capital-intensive firms stand to benefit the most from the new rules.

At the same time, experts caution that increased ECB inflows must be managed carefully to avoid currency risks, particularly if companies do not have natural hedges against foreign exchange fluctuations.

Public feedback

The draft framework has been published on the RBI’s website for public consultation. Stakeholders have been invited to submit comments or suggestions by October 24, 2025, through the “Connect 2 Regulate” portal or via email, with the subject line “Feedback on draft ECB framework.”

The central bank said it would review submissions from industry players, banks, and the public before finalising the new norms.

With this move, the RBI appears set to modernise India’s external borrowing regime, balancing easier access to global capital with the need for financial stability.