RBI Overhauls ECB Norms, India Inc Could Raise $100B Abroad
The Reserve Bank of India has overhauled external commercial borrowing norms. The changes raise borrowing caps, relax pricing and end-use restrictions, and expand eligible borrowers. As a result, Indian companies could raise up to $100 billion in overseas loans in 2026-27.
The Reserve Bank of India has overhauled external commercial borrowing norms. The changes raise borrowing caps, relax pricing and end-use restrictions, and expand eligible borrowers. As a result, Indian companies could raise up to $100 billion in overseas loans in 2026-27.
Reserve Bank of India has finalized a major overhaul of external commercial borrowing (ECB) norms aimed at expanding overseas funding options for Indian corporates. The move could allow companies to raise up to $100 billion from foreign lenders in the 2026-27 financial year.
Under the revised framework, the central bank raised the borrowing cap, eased pricing restrictions and widened the set of eligible borrowers and end-use provisions. Market participants say the changes could boost access to global liquidity and support corporate expansion.
Higher ECB limits and wider access
Under the amended rules, eligible firms can now raise external commercial borrowings up to the higher of $1 billion or 300 percent of net worth, compared with the earlier cap of $750 million. This adjustment applies under the automatic route, which does not require prior RBI approval for eligible borrowers.
The regulator also adjusted maturity norms, allowing manufacturing firms to borrow funds with average maturities between one and three years, provided the outstanding amount does not exceed certain limits. Therefore, companies across sectors may tap overseas funding more flexibly.
Pricing, end-use and cost liberalization
In a key change, the RBI removed the all-in-cost ceiling for ECBs with longer maturities, meaning interest rates will now align more closely with prevailing global benchmarks. As a result, borrowers may secure funds at more competitive terms in certain market conditions.
At the same time, the central bank relaxed several end-use restrictions and clarified conditions under which ECB proceeds can be deployed. Eligible uses include capital expenditure for new projects, expansion of existing operations, and refinancing of domestic loans in a structured manner. However, RBI maintains some restrictions, such as prohibitions on real estate and speculative uses.
Broader corporate impact
With ECB volumes rising in recent years, the revised framework could allow Indian companies to significantly increase their access to foreign capital markets. In the previous fiscal year, firms raised a record $61.18 billion through ECBs. Under the new rules, volumes could approach $100 billion, analysts say.
Some market participants warn, however, that global funding conditions and currency risks will still influence borrowing decisions, despite the regulatory ease.
Realty and infrastructure sectors stand to benefit
The overhaul is expected to boost financing in capital-intensive sectors such as real estate and infrastructure. The revisions explicitly permit ECB funding for large-scale township development, integrated infrastructure projects, and industrial parks. However, developers must comply with safeguards such as completing major infrastructure work before selling plots.
Outlook for markets and funding
Analysts say that easing ECB norms may encourage Indian firms to diversify funding sources and reduce reliance on domestic credit markets alone. Foreign capital may flow into growth projects and acquisitions, although lenders will still price risks based on underlying economic conditions.
Meanwhile, the broader corporate finance landscape could see structural shifts as Indian companies increasingly engage global capital markets amid evolving regulatory frameworks.