ECB Policy Liberalised for Infrastructure Finance Companies
Current · Source: Reserve Bank of India · RBI/2009-10/456 · issued 11 May 2010 · ~1 min read
Quick answerRBI now allows IFCs (NBFC-IFCs) to raise ECBs up to 50% of owned funds under automatic route, easing earlier approval-only norm. Above 50% still needs RBI approval. Other ECB rules unchanged.
The rule, in the simplest words
IFCs (infrastructure finance companies) can borrow foreign money (ECB) up to 50% of their own money (owned funds) without RBI approval – this is the automatic route.
If an IFC wants to borrow more than 50% of its owned funds, it must get RBI approval – this is the approval route.
All other ECB rules, such as a $500 million yearly limit, who can borrow, loan maturity, and reporting, stay unchanged.
Banks that handle IFCs must verify that the IFC follows existing safety rules before approving the loan, whether it’s automatic or approval route.
How it plays out — a real example
Rohan, a senior officer at a Category‑I bank in Mumbai, receives an ECB request from an IFC that wants to borrow $200 million. He checks that the amount is only 40% of the IFC’s owned funds, so he can approve it automatically and help the IFC fund a new highway project. Rohan feels proud to speed up infrastructure development without extra red tape.
What changed
Previously, IFCs could only access ECBs for on-lending to infrastructure under the approval route. Now, they can raise ECBs up to 50% of their owned funds under the automatic route, provided they meet existing prudential norms. ECBs exceeding this threshold still require RBI approval.
What it means for you
This liberalisation gives IFCs faster, less bureaucratic access to foreign funds for infrastructure lending, reducing approval delays. Banks acting as AD Category-I must verify compliance with prudential guidelines when certifying ECB applications under both routes. The move supports infrastructure financing without loosening overall ECB caps or other policy guardrails.
What you must do
Update internal ECB processing guidelines to reflect the automatic route for IFCs up to 50% of owned funds.
Verify IFCs' owned funds and prudential compliance before certifying ECB applications under the automatic route.
Continue routing ECB applications above 50% of owned funds through the approval route to RBI.
Communicate this change to IFC clients and relevant business units handling ECB transactions.
Who it affects
Category-I Authorised Dealer Banks, Infrastructure Finance Companies (NBFC-IFCs), Borrowers in the infrastructure sector
❓ Common questions
What is the new automatic route limit for IFCs under ECB?
IFCs can now raise ECBs up to 50% of their owned funds under the automatic route, subject to prudential norms. Amounts above this require RBI approval.
Does this circular change the USD 500 million annual limit per company?
No, the USD 500 million limit per company per financial year under the automatic route remains unchanged, along with other ECB policy aspects.
What must AD Category-I banks do when processing IFC ECB applications?
Banks must ensure compliance with prudential guidelines and certify applications correctly under either the automatic or approval route, as applicable.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/456
A. P. (DIR Series) Circular No. 51
May 11, 2010
To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to the A.P. (DIR Series) Circular No.05 dated August 1, 2005 and A.P. (DIR Series) Circular No.39 dated March 02, 2010 relating to External Commercial Borrowings (ECB).
2. On a review of the policy, it has been decided to modify the extant ECB policy in respect of the Infrastructure Finance Companies (IFCs) i.e. Non Banking Financial Companies (NBFCs) categorised as IFCs by the Reserve Bank. As per the extant norms, IFCs have been permitted to avail of ECBs for on-lending to the infrastructure sector, as defined in the extant ECB policy, under the approval route. As a measure of liberalisation of the existing procedures, it has been decided to permit the IFCs to avail of ECBs, including the outstanding ECBs, up to 50 per cent of their owned funds under the automatic route, subject to their compliance with the prudential guidelines already in place. ECBs by IFCs above 50 per cent of their owned funds would require the approval of the Reserve Bank and will, therefore, be considered under the approval route . Designated Authorized Dealer banks should ensure compliance with the extant norms while certifying the ECB application both under the automatic and approval routes.
3. All the 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. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
5. 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/2009-10/456 · issued 11 May 2010. The plain-English explanation above is BankPulse’s own independent summary.
Verify IFCs' owned funds and prudential compliance before certifying ECB applications under the automatic route.
Continue routing ECB applications above 50% of owned funds through the approval route to RBI.
📜 Compliance
Update internal ECB processing guidelines to reflect the automatic route for IFCs up to 50% of owned funds.
Communicate this change to IFC clients and relevant business units handling ECB transactions.
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 (Category-I Authorised Dealer Banks, Infrastructure Finance Companies (NBFC-IFCs), Borrowers in the infrastructure sector), your first concrete step on “ECB Policy Liberalised for Infrastructure Finance Companies” is: “Update internal ECB processing guidelines to reflect the automatic route for IFCs up to 50% of owned funds.” (RBI issued this 11 May 2010).
Circular: RBI/2009-10/456 -- ECB Policy Liberalised for Infrastructure Finance Companies
Issued: 11 May 2010
Action required: Update internal ECB processing guidelines to reflect the automatic route for IFCs up to 50% of owned funds.
Action required: Verify IFCs' owned funds and prudential compliance before certifying ECB applications under the automatic route.
Action required: Continue routing ECB applications above 50% of owned funds through the approval route to RBI.
Action required: Communicate this change to IFC clients and relevant business units handling ECB transactions.
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 03 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=5668&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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