In a move aimed at streamlining access to overseas funds and encouraging a more dynamic borrowing ecosystem, the Reserve Bank of India (RBI) has released the Draft External Commercial Borrowing (ECB) Framework under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. This follows the announcement made in the Statement on Developmental and Regulatory Policies dated October 1, 2025.
This draft marks a significant evolution in India’s external borrowing policy landscape, with the goal of rationalizing and simplifying the ECB regime, improving ease of doing business, and aligning with global financing standards.
What’s Changing? Key Features of the Draft ECB Framework
1. Borrowing Limits Linked to Financial Strength
Rather than a one-size-fits-all cap, the proposed framework links ECB borrowing limits to a borrower’s financial health. This dynamic approach allows stronger corporates and institutions greater flexibility in accessing international credit markets, while maintaining adequate safeguards for riskier borrowers.
2. Market-Driven Interest Rates
To align with international financial norms and improve competitiveness, the RBI proposes that ECBs be raised at market-determined interest rates. This move is expected to provide pricing flexibility to both borrowers and lenders and enhance access to cost-effective capital.
3. Simplified End-Use and Maturity Conditions
The end-use restrictions—which dictate how borrowed funds can be used—and the Minimum Average Maturity (MAM) requirements are set to be simplified. This could enable businesses to better match funding with their project lifecycles and reduce red tape, especially for long-gestation infrastructure and capex-heavy projects.
4. Expanded Borrower and Lender Base
To widen access to global funding, the RBI proposes to broaden the eligibility of both borrowers and lenders. This could mean a greater variety of Indian companies—including smaller firms and startups—and more foreign lenders, such as international funds and non-bank institutions, could participate in ECB transactions.
5. Eased Reporting and Compliance
Another major relief for businesses comes in the form of simplified reporting obligations. By reducing the complexity and frequency of compliance filings, RBI aims to lower administrative burden and support more seamless integration with external financial sources.
A Forward-Looking, Growth-Oriented Reform
The proposed changes signal a shift toward greater liberalization while maintaining regulatory oversight. By aligning the ECB framework more closely with market realities and corporate needs, the RBI is enabling Indian entities to diversify funding sources, reduce dependency on domestic banks, and finance expansion more efficiently.
This is particularly timely as India’s economy seeks to accelerate infrastructure development, green energy projects, and innovation-led growth — areas that often require long-term and large-scale capital.
Public Consultation Open Until October 24, 2025
The RBI has invited public comments and stakeholder feedback on the draft ECB framework. Inputs can be submitted through the ‘Connect 2 Regulate’ section on the RBI’s website or via email, with the subject line: “Feedback on draft ECB framework.”
This is a valuable opportunity for businesses, lenders, and financial experts to help shape a progressive, robust, and inclusive borrowing environment in India.