RBI Adopts External Commercial Borrowing (ECB) Policy as Part of Liberalization Measures

In its A.P. (DIR Series) Circular No. 11 dated August 1, 2022 the Reserve Bank of India introduced temporary liberalisation measures to "boost forex inflows while safeguarding overall macroeconomic and financial stability." These policies will be in effect for ECBs raised through December 31, 2022. In order to reflect the temporary liberalisation measures, the Master Direction - External Commercial Borrowings, Trade Credits, and Structured Obligations has also been modified as of August 1, 2022.

• The liberalisation measures include I raising the automatic route limit for ECBs till December 31, 2022 from USD 750 million or equivalent every financial year to USD 1500 million or similar per financial year; and
•  raising the All-in-Cost Ceiling for ECBs until December 31, 2022, by 100 bps. Only qualifying borrowers with an investment grade rating from Indian Credit Rating Agencies would be able to access the increased all-in-cost ceiling (CRAs). ECB may be raised by additional qualified borrowers up to the current all-in-cost cap.