External Commercial Borrowings : Study
Registrations by Indian companies for External Commercial Borrowings (ECBs) almost doubled to $49.2 billion in the financial year 2023-24 (FY24) from $26.6 billion in FY23, according to data from the RBI.
- External Commercial Borrowings (ECBs) refer to the borrowing of funds by Indian companies from foreign sourcesin the form of loans, bonds, or other financial instruments.
- It can be used to finance a variety of purposes, including the expansion of business, the acquisition of assets, and the repayment of existing debt.
- ECBs can be obtained from a variety of sources, including foreign banks, international financial institutions, and foreign subsidiaries of Indian companies.
- ECB can be in the form of rupee-denominated loans, which are repaid in Indian rupees, or foreign currency-denominated loans, which are repaid in a foreign currency.
- ECB is subject to regulatory oversight by the RBI, which sets limits on the amount of ECB that Indian companies can obtain and the purposes for which it can be used.
- As per RBI guidelines, all entities except a Limited Liability Partnership are allowed to raise ECBs.
