Revised ECB regulations: Old wine in new bottle

The Reserve Bank of India’s (RBI) statement on developmental and regulatory policies for December proposed “rationalizing” the external commercial borrowing (ECB) framework “with a view to improving the ease of doing business”. While the statement served as a forewarning, no draft regulations were placed on the RBI’s website for public comments.

On 17 December, the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, were notified, superseding the previous regulations.

The RBI issued further directions on 16 January. The revised framework comprising these directions and the 2018 regulations simplifies the “tracks” for raising ECBs. Tracks I and II (for foreign currency-denominated ECBs) of the previous ECB framework are now merged into a single “foreign currency-denominated ECB” track. Track III (for rupee-denominated ECBs) and rupee-denominated bonds are now merged into a “rupee-denominated ECB” track.

Sawant Singh and Aditya Bhargava are partners at the Mumbai office of Phoenix Legal.