RBI plans sweeping overhaul to ease foreign borrowing

The central bank has proposed a sweeping liberalization of the external commercial borrowing framework, removing cost caps, widening eligibility, and tying fundraising limits to financial strength to make it easier for Indian firms to access foreign funds.

- Subhana Fakhre Alam Shaikh

The proposals are positive for Indian firms looking to raise cheaper funds overseas.

(AP)

Under the Reserve Bank of India’s (RBI's) new proposals, companies would be allowed to raise funds through ECBs up to $1 billion in a financial year or up to 300% of their net worth, whichever is higher, substantially more than the current ceiling of $750 million.

The shift from a fixed monetary cap to a lever tied to net worth is designed to better align borrowing capacity with actual balance sheet strength.