External Commercial Borrowings (ECB) Policy amendment

As per the existing policy on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency, ECB can be raised under tracks I and III for working capital purposes.

As per extant regulations ECB can be raised from direct and indirect equity holders or from a group company for working capital purpose. The above permission was subject to a condition that loan must be for a minimum average maturity period of 5 years. In this regard, RBI vide its circular No.10 dated October 3, 2018 communicated that said provision and permit public sector Oil Marketing Companies (OMCs) to raise ECB for working capital purposes with minimum average maturity period of 3/5 years from all recognized lenders under the automatic route. The communiqué also said that the individual limit of USD 750 million or equivalent and mandatory hedging requirements as per the ECB framework have also been waived for borrowings under this dispensation.

The OMCs however required to have a Board approved forex mark to market procedure and prudent risk management policy, for such ECBs. The overall ceiling for such ECBs is fixed to USD 10 billion equivalent and the said facility will come into effect from the date of RBI Circular.