CORPORATE
Overseas loans to get cheaper for India Inc, if govt approves RBI’s relaxed ECB norms
- IBJ Bureau
- Oct 04, 2025
The Reserve Bank of India (RBI) has proposed a significant easing of rules for external commercial borrowings (ECBs). The proposal is 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 the FEMA, 1999.
The announcement follows the RBI’s Statement on Developmental and Regulatory Policies made on October 1. The central bank has said that the revisions are designed to improve credit flows to the corporate sector, while cutting down on unnecessary compliance requirements.
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 companies 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 companies 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.
If finalised, the changes are expected to help Indian companies diversify funding sources, tap cheaper credit overseas and reduce reliance on domestic borrowing. Analysts say infrastructure, manufacturing and capital-intensive companies stand to benefit the most from the new rules.
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