RBI further simplifies ECB norms

In an attempt to go one step ahead in ease of doing business the overseas borrowing norms have been simplified. The Reserve Bank of India has rationalised the overseas borrowing norms allowing a uniform borrowing limit of Rs 750 million a year across tenors. It has also broadened the scope of borrowers by allowing all entities that are eligible for foreign direct investment (FDI) to borrow through the external commercial borrowing (ECB) route. 

The government has been opening up this sector to attract capital flows ever since the rupee started depreciating steeply vis-a-vis the dollar since April 2018.The current system of two categories-Track I- medium term ECB of three to five years Tracks II- long term ECB of upto ten years are now merged into one under the existing framework as “Foreign Currency denominated ECB”, according to a release by the Reserve Bank on Saturday.The Track III, where the eligible borrowers are NBFCs and microfinance institutions and the rupee denominated borrowings are combined as “Rupee Denominated ECB” to replace the current four-tiered structure. “The framework is instrument-neutral” RBI said.