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Master Circular on ECB and Trade Credits (2009)

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2009-10/27 · issued 01 Jul 2009 · ~2 min read
Quick answerRBI consolidated all ECB and trade credit rules into one master circular effective July 1, 2009, with a one-year sunset clause. It covers automatic and approval routes, eligible borrowers, lenders, maturity, all-in-cost ceilings, end-use restrictions, and reporting for banks authorized to deal in foreign exchange.

What changed

This master circular consolidates all existing instructions on External Commercial Borrowings and Trade Credits into a single document, replacing multiple earlier circulars. It includes a sunset clause, meaning it will be withdrawn on July 1, 2010, and replaced by an updated version. The circular does not introduce new policy changes but organizes existing rules under FEMA 1999 and related notifications.

What it means for you

Banks must now refer to this single master circular for all ECB and trade credit guidelines, simplifying compliance. The one-year validity requires banks to stay alert for the updated circular in 2010. All existing norms for eligible borrowers, lenders, maturity, cost ceilings, and end-use remain unchanged, ensuring continuity in foreign exchange borrowing operations.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All banks authorized to deal in foreign exchange, Indian companies availing ECB or trade credits, Non-resident lenders providing ECB or trade credits, Compliance and treasury departments of banks

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the sunset clause in this master circular?

The master circular includes a sunset clause of one year, meaning it will stand withdrawn on July 1, 2010, and will be replaced by an updated master circular on the same subject.

Does this circular change any existing ECB rules?

No, this circular consolidates all existing instructions on ECB and trade credits into one place without introducing new policy changes. It organizes rules under FEMA 1999 and related notifications.

What are the key components covered in this circular?

The circular covers ECB under automatic and approval routes, including eligible borrowers, recognized lenders, amount and maturity, all-in-cost ceilings, end-use restrictions, guarantees, security, prepayment, refinancing, and reporting arrangements. It also covers trade credits for imports.

📜 Read the original circular — full text as issued by RBI
RBI/2009-10/27 Master Circular No. 07/2009-10   July 1, 2009 To, All Banks Authorised to Deal in Foreign Exchange Madam / Sir, Master Circular on External Commercial Borrowings and Trade Credits External Commercial Borrowings and Trade Credits availed of by residents are  governed by clause (d) of sub-section 3 of section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA 3 / 2000-RB ,viz., Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations 2000, dated May 3, 2000, as amended from time to time. 2. This Master Circular consolidates all existing instructions on the subject of “External Commercial Borrowings and Trade Credits” at one place. The list of underlying circulars / notifications, consolidated in this Master Circular, is furnished in Appendix . 3. This Master Circular is being issued with a sunset clause of one year.  This circular will stand withdrawn on July 1, 2010 and will be replaced by an updated Master Circular on the subject. Yours faithfully, (Salim Gangadharan) Chief General Manager-in-Charge INDEX
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/27 · issued 01 Jul 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5116&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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