ECB Regulations: Changes, Implications And Benefits

Towards the end of 2019, India's central bank (Reserve Bank of India) introduced significant changes in its regulations covering External Commercial Borrowings or ECBs. While ECBs are governed by the Foreign Exchange Management Act, 1999 (FEMA), the most recent Master Direction covering ECBs was updated in August 2019. The Master Direction significantly simplified ECB regulations, opening ECBs up as a funding route for many more companies than the previous Master Direction.

The ECB process is an approval-based process through the RBI. It is to be noted that loans that meet the requirements of the ECB regulations will usually be granted approval, i.e. the approval process is simply to ensure compliance with law. We have recently assisted multiple clients with ECB applications and the timelines for approval have varied between 2 weeks and 2 months from application.