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ARTICLE · 24 JANUARY 2019

RBI Revises ECB Norms: A Step In The Right Direction?

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In view of the Central Government's objective of improving "ease of doing business" in India, the RBI announced a new framework for external commercial borrowings on 16 January 2019 liberalising the current ECB policy.

IndiaFinance and Banking
Manisha Shroff
Manisha Shroff
Ahana Sinha
Ahana Sinha
Juhi Bhat
Juhi Bhat
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Background

In view of the Central Government's objective of improving "ease of doing business" in India, the Reserve Bank of India (RBI) announced a new framework for external commercial borrowings (ECB) on 16 January 2019 liberalising the current ECB policy (the Revised ECB Framework).

The key highlights of the Revised ECB Framework are as follows:

Reclassification and Merging of Tracks

The bifurcation of ECBs into three distinct identified 'Tracks' under the erstwhile regulations has been largely modified by merging Track I and Track II as "FCY denominated ECB" and merging of Track III and Rupee Denominated Bonds (Masala Bonds) framework as "INR denominated ECB". The Revised ECB Framework is aimed at being "instrument-neutral" and is differentiated largely on the basis of the currency denominating such external commercial borrowing.

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