ECB Framework 2025

The Reserve Bank of India (RBI) has proposed significant changes to the External Commercial Borrowings (ECB) framework in 2025, marking the first major overhaul since 2018. Here's a concise summary of the key updates based on the provided information:

Borrowing Limits: Companies can borrow up to $1 billion or 300% of their net worth, whichever is higher. Regulated financial firms face no borrowing cap, providing greater flexibility.

Borrowing Costs: Costs will now be market-driven, moving away from earlier fixed or benchmark-linked rates, allowing for more competitive pricing.

Eligibility Expansion: The eligibility criteria for borrowers have been broadened, enabling more entities to access ECBs.

End-Use Flexibility: Restrictions on the use of funds have been relaxed, permitting ECBs for industrial purposes, mergers and acquisitions (M&A), and overseas investments, in addition to existing uses.

Repatriation Requirement: Proceeds must be repatriated to India unless explicitly used for overseas purposes, ensuring alignment with domestic economic goals.

Maturity and Compliance: Minimum maturity periods, waiver provisions, and stricter norms for tracking fund flows remain unchanged to ensure prudent borrowing practices.