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Liberalisation of External Commercial Borrowings (ECB) Policy- May 2008

The External Commercial Borrowing (ECB) policy is constantly reviewed by the Government in consultation with Reserve Bank of India (RBI) to keep it in tune with the evolving macroeconomic situation, changing market conditions, sectoral requirements, the external sector and the lessons of experience.

Government has decided on 29th May 2008 to modify some aspects of the ECB policy as indicated below:

(a) At present, borrowers proposing to avail ECB up to USD 20 million for Rupee expenditure for permissible end-uses require prior approval of the Reserve Bank under the Approval Route. It has been decided that, henceforth,

(i) borrowers in infrastructure sector may avail ECB up to USD 100 million for Rupee expenditure for permissible end-uses under the Approval Route;

(ii) in the case of other borrowers, the existing limit of USD 20 million for Rupee expenditure for permissible end-uses under the Approval Route has been enhanced to USD 50 million.

(b) The all-in-cost ceilings in respect of ECB are modified as follows:

Average Maturity Period       All-in-Cost ceilings over 6 Months LIBOR*

Three years and up to five years      150 bps (Existing)     200 bps (Revised)

More than five years      250 bps (Existing)     350 bps (Revised)

[s* for the respective currency of credit or applicable benchmark]

The above changes will apply to ECB both under the automatic route and the approval route.

3. This amendment to ECB guidelines will come into force with immediate effect.All other aspects of ECB policy such as USD 500 million limit per company per year under the Automatic Route, eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

This amendment to ECB guidelines will come into force with immediate effect.



ECB Guidelines revision in June 2008 ...Click here
ECB Guidelines revision in May 2007 ...Click here
Special section on External Commercial Borrowings ...Click here

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