India’s ECB Framework Overhaul – Major Liberalisation of Cross-Border Borrowing Regime

With effect from 16 February 2026, the Reserve Bank of India has fundamentally reshaped the ECB regime under the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026. The reforms dismantle key legacy constraints, including the all-in-cost cap, FATF/IOSCO lender restrictions, AD Bank approval requirements for transfers and amendments, and rigid end-use prohibitions.

Notably, the new framework enables:

• Market-determined pricing
• Acquisition finance for strategic transactions involving acquisition of control
• Third-party and IP-backed security structures
• Net worth-linked borrowing limits (up to USD 1 billion or 300% of net worth)
• Streamlined refinancing and secondary trading
• Removal of mandatory hedging

These developments significantly enhance India’s attractiveness for private credit funds, offshore lenders, and cross-border M&A financing structures.

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