Current · Source: Reserve Bank of India · RBI/2007-08/339 · issued 29 May 2008 · ~2 min read
Quick answerRBI has raised ECB limits for rupee expenditure under the Approval Route: infrastructure borrowers can now access up to USD 100 million, others up to USD 50 million. All-in-cost ceilings have also been eased by 50-100 bps over LIBOR, effective immediately.
The rule, in the simplest words
Infrastructure borrowers can now get up to USD 100 million (how much money) of foreign loans for rupee spending under the Approval Route (needs RBI okay).
Other corporate borrowers can get up to USD 50 million (instead of the old USD 20 million) for rupee spending under the same Approval Route.
The total cost limit (all‑in‑cost ceiling) for 3‑5 year loans is now 200 basis points (2%) above LIBOR (the world interest rate), up from 150 bps.
For loans longer than 5 years, the cost limit is now 350 basis points (3.5%) above LIBOR, up from 250 bps.
The automatic‑route cap of USD 500 million per company per year stays the same, so banks still watch the overall exposure limit.
How it plays out — a real example
Rohit, an ECB officer at State Bank of India in Mumbai, meets an infrastructure developer who wants to fund a new highway. Rohit tells the client they can now apply for a USD 80 million rupee‑based loan under the Approval Route, and the borrower can negotiate a cost as high as 200 bps over LIBOR for a 4‑year term. He updates the bank’s internal checklist to reflect the new USD 100 million limit for infrastructure projects and informs the client about the higher cost ceiling, helping them close the deal smoothly.
What changed
Previously, all borrowers needed prior RBI approval for ECB up to USD 20 million for rupee expenditure. Now, infrastructure sector borrowers can avail up to USD 100 million, and other borrowers up to USD 50 million under the Approval Route. Additionally, all-in-cost ceilings have been revised: for 3-5 year maturity, from 150 bps to 200 bps over LIBOR; for over 5 years, from 250 bps to 350 bps over LIBOR.
What it means for you
Banks can now facilitate larger ECB for rupee expenditure, especially for infrastructure projects, reducing the need for frequent approvals. The higher cost ceilings give borrowers more flexibility to negotiate terms with foreign lenders, potentially increasing ECB inflows. However, the USD 500 million automatic route limit per company per year remains unchanged, so overall exposure caps stay intact.
What you must do
Update internal ECB processing guidelines to reflect the new USD 100 million limit for infrastructure and USD 50 million for other borrowers under the Approval Route.
Inform corporate clients about the revised all-in-cost ceilings (200 bps for 3-5 years, 350 bps for over 5 years) to help them structure better deals.
Ensure compliance with unchanged aspects like the USD 500 million automatic route cap, eligible borrowers, and end-use norms.
Advise customers to submit applications under the Approval Route for rupee expenditure ECB exceeding the enhanced limits.
Who it affects
Authorised Dealer Category-I banks, Infrastructure sector borrowers, Other corporate borrowers seeking ECB for rupee expenditure, Foreign lenders and investors in Indian debt
❓ Common questions
Does this circular change the automatic route limit for ECB?
No, the USD 500 million limit per company per year under the Automatic Route remains unchanged. Only the Approval Route limits for rupee expenditure have been enhanced.
Are the revised all-in-cost ceilings applicable to both automatic and approval routes?
Yes, the circular states that the changes in all-in-cost ceilings apply to ECB under both the automatic route and the approval route.
What end-uses are still permissible for ECB under these new limits?
The circular does not change existing end-use norms. Permissible end-uses for rupee expenditure remain as per earlier ECB policy, including for infrastructure projects and other approved purposes.
📜 Read the original circular — full text as issued by RBI
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-08/339 · issued 29 May 2008. The plain-English explanation above is BankPulse’s own independent summary.
Advise customers to submit applications under the Approval Route for rupee expenditure ECB exceeding the enhanced limits.
📜 Compliance
Update internal ECB processing guidelines to reflect the new USD 100 million limit for infrastructure and USD 50 million for other borrowers under the Approval Route.
Inform corporate clients about the revised all-in-cost ceilings (200 bps for 3-5 years, 350 bps for over 5 years) to help them structure better deals.
Ensure compliance with unchanged aspects like the USD 500 million automatic route cap, eligible borrowers, and end-use norms.
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 Category-I banks, Infrastructure sector borrowers, Other corporate borrowers seeking ECB for rupee expenditure, Foreign lenders and investors in Indian debt), your first concrete step on “ECB Policy Liberalised: Higher Limits & Lower Cost Ceilings” is: “Update internal ECB processing guidelines to reflect the new USD 100 million limit for infrastructure and USD 50 million for other borrowers under the Approval Route.” (RBI issued this 29 May 2008).
Action required: Update internal ECB processing guidelines to reflect the new USD 100 million limit for infrastructure and USD 50 million for other borrowers under the Approval Route.
Action required: Inform corporate clients about the revised all-in-cost ceilings (200 bps for 3-5 years, 350 bps for over 5 years) to help them structure better deals.
Action required: Ensure compliance with unchanged aspects like the USD 500 million automatic route cap, eligible borrowers, and end-use norms.
Action required: Advise customers to submit applications under the Approval Route for rupee expenditure ECB exceeding the enhanced limits.
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4200&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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