Quick answerRBI now allows Multi-State Co-operative Societies engaged in manufacturing to raise External Commercial Borrowings under the Approval Route, subject to solvency, audited balance sheets, and compliance with ECB guidelines.
What changed
Previously, Multi-State Co-operative Societies were not eligible for ECB under the Approval Route. This circular extends eligibility to those engaged in manufacturing, provided they meet solvency and documentation requirements.
What it means for you
Banks must now process ECB proposals from manufacturing Multi-State Co-operative Societies under the Approval Route, ensuring they meet all standard ECB parameters. This expands the borrower base for foreign borrowing, potentially increasing demand for AD bank services.
The rule, in the simplest words
Multi-State Co-operative Societies [groups that work in many states and help people] that make things [like factories] can now borrow money from other countries [called External Commercial Borrowings or ECB] if they are approved
These groups must show they have enough money [be financially solvent] and give their latest audited [checked by an accountant] balance sheets
They must also follow all the rules for ECB, like who they can borrow from [recognized lender], what they can use the money for [permitted end-use], and how much they can borrow [all-in-cost ceiling]
How it plays out — a real example
A gold-loan officer in Mumbai, working with a Multi-State Co-operative Society that makes textiles, can now help the society apply for an ECB under the Approval Route, as long as the society meets the solvency and documentation requirements. The officer will verify the society's financial solvency and obtain its up-to-date audited balance sheets before processing the proposal. This will expand the borrower base for foreign borrowing and potentially increase demand for the bank's services.
What you must do
Update internal ECB eligibility checklists to include Multi-State Co-operative Societies engaged in manufacturing.
Verify financial solvency and obtain up-to-date audited balance sheets from such societies before processing proposals.
Ensure all ECB proposals from these societies comply with existing guidelines on recognized lenders, end-use, maturity, and all-in-cost ceilings.
Communicate this change to relevant constituents and customers.
Who it affects
Authorised Dealer banks, Multi-State Co-operative Societies engaged in manufacturing, Borrowers seeking ECB under Approval Route
What are the key conditions for a Multi-State Co-operative Society to raise ECB?
The society must be financially solvent, submit up-to-date audited balance sheets, and comply with all other ECB parameters like recognized lender, permitted end-use, average maturity, and all-in-cost ceilings.
Does this circular apply to all co-operative societies?
No, it specifically applies to Multi-State Co-operative Societies engaged in manufacturing activity. Other co-operative societies are not covered by this circular.
What route must be used for these ECB proposals?
All proposals must be submitted under the Approval Route, meaning they require prior RBI approval.
📜 Read the original circular — full text as issued by RBI
RBI/2005-06/281
A.P. (DIR Series) Circular No. 23
January 23, 2006
To
All Banks Authorised to Deal in Foreign Exchange
Madam / Sir,
External Commercial Borrowings
(ECB) by Multi-State Co-operative Societies
Attention of Authorised Dealer
banks is invited to paragraph 1(B) (i) of the Annex to A.
P. (DIR Series) Circular No.5 dated August 1, 2005 regarding borrowers eligible
to access External Commercial Borrowings (ECB) under the Approval Route.
2. Keeping in view recent developments
and representations received from various organisations, it has been decided
to allow Multi-State Co-operative Societies engaged in manufacturing activity
to raise ECB. The proposals for ECB by Multi-State Co-operative Societies engaged
in manufacturing activity would be considered by the Reserve Bank under the
Approval Route, provided :
i. the Co-operative Society is
financially solvent,
ii. the Co-operative Society submits
its up-to-date audited balance sheet and
iii. the proposal complies with
all other parameters of ECB guidelines such as recognised lender, permitted
end-use, average maturity period, all-in-cost ceiling etc. as mentioned in paragraph
1 (B) of the circular dated August 01, 2005, referred to above.
3. Authorised Dealer banks
may bring the contents of this circular to the notice of their constituents
and customers concerned.
4. The directions contained
in this circular have been issued under section 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions
/ approvals, if any, required under any other law.
Yours faithfully,
Vinay Baijal
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/281 · issued 23 Jan 2006. The plain-English explanation above is BankPulse’s own independent summary.
Test yourself
Quick self-check built only from the facts already on this page — tap a question to reveal the answer.
Q1. In one line, what does this circular do?
RBI now allows Multi-State Co-operative Societies engaged in manufacturing to raise External Commercial Borrowings under the Approval Route, subject to solvency, audited balance sheets, and compliance with ECB guidelines.
Q2. Who does this circular apply to?
Authorised Dealer banks, Multi-State Co-operative Societies engaged in manufacturing, Borrowers seeking ECB under Approval Route
Q3. What is the first thing you should do about it?
Update internal ECB eligibility checklists to include Multi-State Co-operative Societies engaged in manufacturing.
Update internal ECB eligibility checklists to include Multi-State Co-operative Societies engaged in manufacturing.
Verify financial solvency and obtain up-to-date audited balance sheets from such societies before processing proposals.
Ensure all ECB proposals from these societies comply with existing guidelines on recognized lenders, end-use, maturity, and all-in-cost ceilings.
Communicate this change to relevant constituents and customers.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Authorised Dealer banks, Multi-State Co-operative Societies engaged in manufacturing, Borrowers seeking ECB under Approval Route), your first concrete step on “ECB Access for Multi-State Co-operative Societies” is: “Update internal ECB eligibility checklists to include Multi-State Co-operative Societies engaged in manufacturing.” (RBI issued this 23 Jan 2006).
Circular: RBI/2005-06/281 -- ECB Access for Multi-State Co-operative Societies
Issued: 23 Jan 2006
Action required: Update internal ECB eligibility checklists to include Multi-State Co-operative Societies engaged in manufacturing.
Action required: Verify financial solvency and obtain up-to-date audited balance sheets from such societies before processing proposals.
Action required: Ensure all ECB proposals from these societies comply with existing guidelines on recognized lenders, end-use, maturity, and all-in-cost ceilings.
Action required: Communicate this change to relevant constituents and customers.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
AI-drafted · 1-model AI consensus fact-check · under the editorial review of our expert review panel · decoded & published by BankPulse · 21 Jun 2026, 07:26 IST
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2708&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert review panel. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.