ECB All-in-Cost Ceiling Relaxation Extended to Dec 2009
Current · Source: Reserve Bank of India · RBI/2008-09/460 · issued 28 Apr 2009 · ~2 min read
Quick answerRBI extends the waiver of all-in-cost ceilings on ECB under the approval route until December 31, 2009, to ease pressure from tight international credit spreads. All other ECB norms remain unchanged.
The rule, in the simplest words
All-in-cost ceilings on External Commercial Borrowings (ECB) under the approval route are waived until December 31, 2009 (all-in-cost ceilings = the maximum cost a borrower can pay on the loan).
The waiver was originally until June 30, 2009, and has now been extended to the end of 2009.
All other ECB rules stay the same: a USD 500 million limit per company per year under the automatic route (automatic route = when cost is below the ceiling), eligible borrower, lender, end-use, maturity, prepayment, refinancing, and reporting requirements.
Banks must still ensure borrower eligibility and that the borrowed money is used for the approved purpose, and the policy will be reviewed again in December 2009.
How it plays out — a real example
Ramesh, a gold‑loan officer in Indore, helps a textile company borrow USD 200 million via ECB. Because the cost is above the usual ceiling, Ramesh advises the company to apply under the approval route. RBI’s waiver until December 31, 2009 lets Ramesh approve the loan without worrying about the cost limit, while still checking that the company is eligible and the money will be used for production.
What changed
The temporary relaxation of all-in-cost ceilings on ECB under the approval route, initially set to expire on June 30, 2009, has been extended to December 31, 2009. This extension follows the announcement in the Annual Policy Statement 2009-10, citing continued pressure on international credit spreads. The relaxation will be reviewed in December 2009.
What it means for you
Borrowers can now approach RBI under the approval route for ECB beyond standard cost ceilings until end-2009, offering more flexibility in a tight credit market. For banks, this means continued opportunities to facilitate ECB deals for eligible clients without the usual cost cap, but due diligence on borrower eligibility and end-use remains critical. The extension signals RBI's support for external funding amid global market stress.
What you must do
Inform corporate clients about the extended ECB cost ceiling relaxation under the approval route until December 31, 2009.
Ensure all ECB transactions comply with unchanged norms like the USD 500 million automatic route limit, eligible borrower, lender, end-use, and maturity requirements.
Advise clients to approach RBI under the approval route for ECB proposals exceeding all-in-cost ceilings.
Monitor the December 2009 review for any policy changes.
Who it affects
Category-I Authorised Dealer Banks, Corporate borrowers eligible for ECB, AD banks facilitating ECB transactions
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the all-in-cost ceiling relaxation for ECB?
RBI has temporarily waived the all-in-cost ceilings on ECB under the approval route, meaning borrowers can seek approval for loans with higher costs than normally allowed. This relaxation is now extended until December 31, 2009.
Does this change affect the automatic route limit of USD 500 million?
No, the USD 500 million limit per company per financial year under the automatic route remains unchanged. Only the cost ceiling under the approval route is relaxed.
What should banks do to comply with this circular?
Banks must bring the extension to the notice of their customers, ensure all other ECB guidelines are followed, and guide clients to approach RBI for approval if cost ceilings are exceeded.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
RBI’s words: “Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to para 2 (iv) of the A.P. (DIR Series) Circular No. 46 dated January 02, 2009”
📜 Read the original circular — full text as issued by RBI
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the A.P. (DIR Series) Circular No. 46 dated January 2, 2009 relating to External Commercial Borrowings (ECB) and in terms of Para 2 of the circular, it was decided to dispense with the requirement of all-in-cost ceilings on ECB, under the approval route, until June 30, 2009. Accordingly, eligible borrowers, proposing to avail of ECB beyond the prescribed all-in-cost ceilings could approach the Reserve Bank, under the approval route.
2. As announced in Para 107 of the Annual Policy Statement 2009-10 and considering the continuing pressure on credit spreads in the international markets, it has been decided to extend the relaxation in all–in-cost ceilings, under the approval route, until December 31, 2009. This relaxation will be reviewed in December 2009.
3. The modifications to the ECB guidelines shall come into force with immediate effect. All other aspects of ECB policy, such as USD 500 million limit per company per financial year under the Automatic Route, eligible borrower, recognised lender, end-use, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.
4. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000 are being issued separately.
5. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
6.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/2008-09/460 · issued 28 Apr 2009. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (Category-I Authorised Dealer Banks, Corporate borrowers eligible for ECB, AD banks facilitating ECB transactions), your first concrete step on “ECB All-in-Cost Ceiling Relaxation Extended to Dec 2009” is: “Inform corporate clients about the extended ECB cost ceiling relaxation under the approval route until December 31, 2009.” (RBI issued this 28 Apr 2009).
Circular: RBI/2008-09/460 -- ECB All-in-Cost Ceiling Relaxation Extended to Dec 2009
Issued: 28 Apr 2009
Action required: Inform corporate clients about the extended ECB cost ceiling relaxation under the approval route until December 31, 2009.
Action required: Ensure all ECB transactions comply with unchanged norms like the USD 500 million automatic route limit, eligible borrower, lender, end-use, and maturity requirements.
Action required: Advise clients to approach RBI under the approval route for ECB proposals exceeding all-in-cost ceilings.
Action required: Monitor the December 2009 review for any policy changes.
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
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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=4958&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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