In a major move to liberalize access to offshore capital, the Reserve Bank of India (RBI) notified the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 on February 16, 2026.
The revised framework replaces the previous fixed annual cap with a dynamic limit, significantly increasing the amount Indian entities can borrow from overseas markets without prior approval.
New External Commercial Borrowing (ECB) Limits
The RBI has scrapped the flat $750 million annual limit per borrower in favor of a formula-based cap that rewards companies with stronger balance sheets.
| Metric | Previous Limit | New Revised Limit (Feb 2026) |
| Monetary Cap | $750 Million per financial year | $1 Billion in total outstanding ECBs |
| Leverage Cap | Liability-to-equity ratio (7:1) | 300% of Net Worth (Total borrowings) |
| Calculation | Whichever is applicable | Whichever is higher of the two |
Key Takeaway: Large Indian corporates with a high net worth can now potentially borrow several billion dollars through the automatic route, provided it remains within 300% of their audited net worth.
Major Policy Shifts
The 2026 amendment represents a shift from a “rule-bound” approach to a “market-driven” framework.
- Removal of All-in-Cost Ceiling: The RBI has eliminated the prescriptive cost caps (previously linked to benchmarks like SOFR). Borrowing costs will now be market-determined, subject to the satisfaction of the borrower’s Authorised Dealer (AD) Category-I bank.
- Uniform Maturity Norms: The complex Minimum Average Maturity Period (MAMP) requirements (which varied from 1 to 10 years based on end-use) have been unified to a standard 3 years.
- Exception: Manufacturing companies can access shorter-tenor ECBs (1–3 years) for amounts up to $150 million.
- Simplified End-Use: The “negative list” for fund utilization has been pruned. Notably, the acquisition of control (M&A) is now explicitly a permitted end-use for ECB proceeds.
- Event-Based Reporting: Borrowers no longer need to submit rote monthly reports. Reporting is now event-based, required only upon specific triggers like drawdowns, refinancing, or prepayments.
Strategic Context: Why Now?
The liberalization comes at a time when Indian companies raised a record $61 billion through the ECB route in FY25. By lifting the “monetary ceiling” and letting the market decide interest rates, the RBI is positioning India to attract larger volumes of foreign debt to fund massive infrastructure and manufacturing projects, such as the Adani Group’s $100B data center push.
