As per existing External Commercial Borrowings policy norms, ECB proceeds could not be utilized by the borrowers for the following purposes. (i) Working capital purposes,

(ii) General corporate purposes,

(iii)Repayment of Rupee loans except when the ECB is availed from foreign equity holder for a minimum average maturity period of 5 years.
(iv) On-lending for above activities out of ECB proceeds is also prohibited.

With a view to liberalise the ECB framework, RBI vide its circular dated Jul 30, 2019 RBI has relaxed the end-use restrictions on external commercial borrowings for Working Capital requirements, General Corporate purposes and Repayment of rupee loans. Thus, eligible borrowers will now be permitted to raise ECBs for the following purposes from recognised lenders, except foreign branches/ overseas subsidiaries of Indian banks.

1. Borrowings with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes.
2. Borrowing for on-lending, for a minimum average maturity period of 10 years and the end-uses by NBFCs is permitted.
3. Borrowings with a minimum average maturity period of 7 years for repayment of Rupee loans availed domestically for capital expenditure.
4. The borrowings for on-lending by NBFCs for the repayment of rupee loans would also be permitted.
5. For repayment of Rupee loans availed domestically for purposes other than capital expenditure and for on-lending by NBFCs for the same, the minimum average maturity period of the ECB would have to be 10 years.
6. Eligible corporate borrowers to avail ECB for repayment of Rupee loans availed domestically for capital expenditure in manufacturing and infrastructure sector and classified as SMA-2 or NPA, under any one-time settlement arrangement with lenders.
7. Lender banks are also permitted to sell, through assignment, such loans to eligible ECB lenders, except foreign branches/ overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework.

The Reserve Bank circular addressed to All Category-I Authorised Dealer Banks stipulates that prescribed minimum average maturity provision, as above, for the aforesaid end-uses will have to be strictly complied with under all circumstances.