What changed
The ECB automatic route limit was raised from USD 500 million to USD 750 million per financial year per borrower. Average maturity guidelines were revised: ECB up to USD 20 million needs minimum 3-year average maturity, and ECB above USD 20 million up to USD 750 million needs minimum 5-year average maturity. The separate maturity, prepayment, and call/put option rules for the earlier additional USD 250 million were dispensed with.
What it means for you
Indian banks and corporates now have a higher automatic route ceiling for ECB, simplifying compliance by removing the earlier tiered structure for the additional USD 250 million. The unified maturity framework reduces complexity for lenders and borrowers. Refinancing of existing FCCBs also now falls under the higher USD 750 million limit, giving more headroom for restructuring.
What you must do
- Update internal ECB policy documents to reflect the new USD 750 million automatic route limit and revised maturity guidelines.
- Advise corporate clients on the simplified maturity norms: 3 years for ECB up to USD 20 million, 5 years for larger amounts.
- Ensure that refinancing of existing FCCBs is tracked under the new USD 750 million limit for automatic route eligibility.
- Review and remove any references to the earlier additional USD 250 million rules in your compliance checklists.
Who it affects
Category-I Authorised Dealer Banks, Corporate borrowers eligible for ECB under automatic route, Firms in hotel, hospital, and software sectors raising FCCBs
What is the new ECB limit under the automatic route?
The limit is USD 750 million or equivalent per financial year per borrower for permissible end-uses, up from USD 500 million.
Are there any changes to FCCB limits?
Yes, eligible borrowers under automatic route can raise FCCBs up to USD 750 million per year. For hotel, hospital, and software sectors, the FCCB limit is USD 200 million per year, with the condition that proceeds cannot be used for land acquisition.
What happens to the earlier rules for the additional USD 250 million?
The separate average maturity, prepayment, and call/put option rules for that additional amount have been removed, simplifying the framework.