The Reserve Bank of India has notified the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026, amending the existing ECB framework under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. The amendment seeks to rationalise borrowing limits, strengthen end-use monitoring, and align the framework with evolving restructuring and prudential norms under the Foreign Exchange Management Act, 1999.
Earlier, ECB limits were largely linked to fixed monetary thresholds with sector-based relaxations issued through circulars. While end-use restrictions existed (e.g., real estate and capital market investment), there were interpretational gaps regarding strategic acquisitions, refinancing of stressed loans, and restructuring transactions. Monitoring mechanisms, particularly for persistent non-reporting borrowers, were not expressly codified.
The amendment substitutes key definitions, inserts Regulation 3A prescribing detailed end-use restrictions, and overhauls Schedule I (ECB Framework). It revises the borrowing limit to the higher of USD 1 billion or 300% of net worth, introduces structured safeguards against use for capital market transactions and NPA refinancing, formalises treatment of corporate actions, strengthens security and conversion provisions (aligned with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019), and establishes a mechanism to classify non-compliant entities as “untraceable borrowers.
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13306&Mode=0
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