Home › Circulars › RBI/2007-08/346

Services Sector ECB Liberalised: Hotels, Hospitals, Software Firms Allowed Up to USD 100 Mn

Current · Source: Reserve Bank of India · RBI/2007-08/346 · issued 02 Jun 2008 · ~2 min read
Quick answerRBI now permits hotels, hospitals, and software companies to raise ECB up to USD 100 million per financial year under Approval Route for importing capital goods. Trade credit limit of USD 20 million per import for capital goods continues unchanged.
The rule, in the simplest words
How it plays out — a real example

Amar, a forex & trade-finance officer in Indore, helps a local hospital apply for a USD 80 million loan from a foreign bank to import new medical equipment. Amar ensures the hospital meets all the necessary requirements and complies with RBI guidelines before submitting the application.

What changed

Previously, services sector entities were not eligible for ECB under Automatic Route. Now, hotels, hospitals, and software companies can access ECB up to USD 100 million per financial year under Approval Route, specifically for importing capital goods. The existing trade credit facility of USD 20 million per import transaction for capital goods remains in place.

What it means for you

Banks can now process ECB applications from eligible services sector clients under Approval Route, expanding lending opportunities. This liberalisation supports capital expenditure in hospitality, healthcare, and IT sectors, potentially boosting demand for foreign currency loans. Banks must ensure compliance with all other ECB policy aspects and route approvals through RBI.

What you must do

Who it affects

Authorised Dealer Category - I banks, Hotels, hospitals, and software companies seeking ECB, Borrowers in services sector importing capital goods

❓ Common questions

Which services sector entities are now eligible for ECB?

Hotels, hospitals, and software companies can avail ECB up to USD 100 million per financial year under Approval Route for importing capital goods.

Does this circular change the trade credit limits?

No, the existing trade credit limit of USD 20 million per import transaction for capital goods, for less than 3 years, remains unchanged.

What route must be used for these ECBs?

These ECBs must be availed under the Approval Route, not the Automatic Route.

📜 Read the original circular — full text as issued by RBI
RBI/2007-08/346 A. P. (DIR Series) Circular No. 46 June 2, 2008 To All Category - I Authorised Dealer Banks Madam / Sir, External Commercial Borrowings (ECB) by Services Sector -Liberalization Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the A. P. (DIR Series) Circular No. 5 dated August 1, 2005 relating to External Commercial Borrowings (ECB) and Notification No. FEMA 3/2000-RB dated May 3, 2000, as amended from time to time. 2. Under the extant ECB guidelines, borrowers in the services sector are not eligible to avail ECB under the Automatic Route. It has been decided, in consultation with the Government of India, to allow entities in the service sector viz. hotels, hospitals and software companies to avail ECB up to USD 100 million, per financial year, for the purpose of import of capital goods under the Approval Route. All other aspects of ECB policy shall remain unchanged. 3. It is also clarified that the existing guidelines on trade credit, allowing companies including those in the services sector, to avail trade credit up to USD 20 million per import transaction, for a period less than 3 years, for import of capital goods, shall continue [cf A. P. (DIR Series) Circular No. 87 dated April 17, 2004]. 4. This amendment to ECB guidelines will come into force with immediate effect.    5. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000 are being issued separately. 6. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.  7. The directions contained in this circular have been issued under sections 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, (Salim Gangadharan) Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-08/346 · issued 02 Jun 2008. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Inform eligible clients (hotels, hospitals, software firms) about the new USD 100 million ECB facility.
  • Ensure all ECB applications for services sector are routed through Approval Route and comply with existing ECB guidelines.
  • Continue to process trade credit up to USD 20 million per import for capital goods as per existing norms.
📜 Compliance
  • Update internal ECB policy documents to include services sector eligibility under Approval Route.
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, Hotels, hospitals, and software companies seeking ECB, Borrowers in services sector importing capital goods), your first concrete step on “Services Sector ECB Liberalised: Hotels, Hospitals, Software Firms Allowed Up to USD 100 Mn” is: “Update internal ECB policy documents to include services sector eligibility under Approval Route.” (RBI issued this 02 Jun 2008).

  1. Circular: RBI/2007-08/346 -- Services Sector ECB Liberalised: Hotels, Hospitals, Software Firms Allowed Up to USD 100 Mn
  2. Issued: 02 Jun 2008
  3. Action required: Update internal ECB policy documents to include services sector eligibility under Approval Route.
  4. Action required: Inform eligible clients (hotels, hospitals, software firms) about the new USD 100 million ECB facility.
  5. Action required: Ensure all ECB applications for services sector are routed through Approval Route and comply with existing ECB guidelines.
  6. Action required: Continue to process trade credit up to USD 20 million per import for capital goods as per existing norms.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4216&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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