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ECB End Use Norms Relaxed by RBI

The Reserve Bank of India (RBI) has wide press release dated 30. 07. 2019 revised the framework for External Commercial Borrowings

In the earlier framework as covered in the Master Direction – External Commercial Borrowings, Trade Credit, and Structured Obligations (Master Directions), ECB proceeds could not be utilized for working capital purposes, general corporate purposes and repayment of Rupee loans except when the ECB was availed from foreign equity holder for a minimum average maturity period (MAMP) of 5 years.

RBI ECB norms

Further lending out of ECB proceeds for real estate activities, investment in the capital market, Equity investment, working capital purposes, general corporate purposes, repayment of rupee loans was also prohibited. These restrictions were made under the end-uses (Negative list) of the Master Direction.

The said relaxations by RBI reflect as under:

ECBs Availed fromECBs Availed fromByPermitted End-usesMAMP
Erstwhile ProvisionForeign Equity HolderEligible Borrower
  • Working capital purposes
  • General corporate purposes or,
  • Repayment of Rupee loans


5 Years


Amended ProvisionRecognised Lenders*Eligible Borrower
  • Working capital purposes and,
  • General corporate purposes
10 Years
Recognised Lenders*NBFC’s    On-lending for:

  • Working Capital purposes and,
  • General Corporate Purpose
10 Years


Recognised Lenders*Eligible Borrowers including
  • Repayment of Rupee loans availed domestically for capital expenditure and,


7 Years
Eligible Borrowers including NBFC’s
  •  On-lending for above purpose by NBFC’s
Recognised Lenders*Eligible Borrowers including NBFC’s
  • Repayment of Rupee loans availed domestically for purposes other than capital expenditure and,
  • On-lending for above purpose by NBFC’s
10 Years

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