RBI Circular On ECB Regulations – End Use Relaxations

Introduction

The year 2019 has brought a flurry of legal and regulatory reforms to facilitate doing business in India. The Reserve Bank of India ("RBI") has also joined the bandwagon of regulatory reforms by liberalising the policy on external commercial borrowings ("ECBs").

By virtue of its power to regulate borrowing or lending in foreign exchange under Section 6 of the Foreign Exchange Management Act, 1999 the RBI regulates ECBs which are commercial loans raised by eligible resident entities from recognised non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. Under A.P. (DIR Series) Circular 04 of RBI dated 30^thJuly 2019 ("ECB Circular")¹, the end-use provisions have been amended.