RBI: Liberalised ECB Regulations for Broader Borrower Base

• The RBI has amended the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, to widen access to External Commercial Borrowings (ECBs).
• The revised framework allows a broader range of borrowers to access ECBs, including non-individual entities that do not have foreign investment.
• The RBI has expanded the recognised lender base to include individuals, group companies, and financial institutions or their branches set up in an IFSC.
• Borrowers will now need to ensure arm's length borrowing from related parties and comply with new checks to prevent misuse of ECBs.

The revised framework aims to provide greater flexibility and wider access to External Commercial Borrowings (ECBs).

The Reserve Bank of India (RBI) has made significant amendments to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. The revised framework aims to provide greater flexibility and wider access to External Commercial Borrowings (ECBs). According to the RBI, the changes are designed to promote economic growth by enabling more Indian entities to tap into external funding sources.

The amended regulations now allow a broader range of borrowers to access ECBs, including non-individual entities that do not have foreign investment. This is expected to benefit Limited Liability Partnerships (LLPs) and other eligible entities that can now raise funds without the need for foreign investment.

One of the key features of the revised framework is the expansion of the recognised lender base. The RBI has broadened the definition to include individuals, group companies of Indian entities, offshore branches of RBI-regulated lenders, and financial institutions or their branches set up in an International Financial Services Centre (IFSC). This move is expected to increase access to ECBs for eligible borrowers.

Another significant change is the introduction of arm's length borrowing from related parties. Borrowers will now need to ensure that such transactions are conducted at market rates, reducing the risk of unfair practices.

The revised framework also allows for borrowing in Indian Rupees (INR), providing greater flexibility to borrowers. Additionally, the RBI has introduced new compliance checks to prevent misuse of ECBs.

The revised ECB framework is expected to have a positive impact on the Indian economy by enabling more entities to access external funding sources. This can lead to increased economic growth, job creation, and competitiveness. The expanded eligibility criteria and broader recognised lender base are particularly significant, as they may enable more Indian entities to tap into external commercial borrowings.

Lawyers should take note of the revised framework's implications for their clients. The expanded eligibility criteria and broader recognised lender base may require adjustments to existing lending agreements and compliance procedures. It is essential for lawyers to stay up-to-date with the latest developments in this area to provide effective advice to their clients.

Lawyers should watch for the expanded eligibility criteria and broader recognised lender base under the revised ECB framework, which may enable more Indian entities to access external commercial borrowings.

Source: Original reporting via RBI Gazette Notification dated February 9, 2026