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Overview
- The Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 (the "ECB Regulations") introduced by the Reserve Bank of India (the "RBI") effective from February 16, 2026
- Significant changes made to:
- borrower and lender eligibility,
- borrowing limits,
- all in costs,
- end-uses, and
- currency of borrowing
- Overall, the ECB Regulations intend to free up the ability of Indian companies to borrow from overseas
Eligible Borrowers and Lenders
Earlier position
- Only FDI-eligible entities could borrow
- Limited specified borrowers included - Port Trusts, SEZ units, SIDBI EXIM Bank (FCY ECB), Registered MFIs (INR ECB)
- Lenders had to be from FATF/ IOSCO compliant countries
Practical impact
- Wider lender pool
- Easier deal structuring
- Sectoral laws still override (REITs, InvITs, trusts, etc.)
Now
- Any Indian entity (except individuals) can borrow
- Any non-resident can be lender
- Foreign branches of Indian regulated entities can also lend
- FATF/ IOSCO restriction removed
Borrowing Limits
Earlier position
- US$ 750 million annual cap
- 7:1 liability–equity ratio (foreign equity ECB)
Exceptions
- Refinancing ECB
- RBI-regulated entity borrowings
Now
- Borrowing up to higher of:
- US$ 1 billion outstanding, or
- 300% of net worth
- Annual cap removed
- Liability-equity ratio removed
Impact
- Higher overall borrowing headroom
- Capacity linked to balance sheet strength
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