ECB Scheme: Higher Limits for Rupee Loan Repayment & Capex
Current · Source: Reserve Bank of India · RBI/2012-13/200 · issued 11 Sep 2012 · ~2 min read
Quick answerRBI has enhanced the maximum ECB limit under the USD 10 billion scheme to 75% of average forex earnings or 50% of the highest annual earnings in the past three years, whichever is higher. SPVs with at least one year of existence can now borrow up to 50% of last year's export earnings. Group-level cap is USD 3 billion.
The rule, in the simplest words
Banks can lend up to 75% of a company's average forex earnings over 3 years, or 50% of the highest single-year earnings, whichever is higher.
For companies with less than 3 years of earnings history, banks can lend up to 50% of their last year's export earnings.
There's a new overall cap of USD 3 billion per company or group for external commercial borrowings.
How it plays out — a real example
A forex & trade-finance officer in Indore, Mr. Kumar, helps a local exporter, Ms. Patel, to access a larger ECB loan to repay her rupee loan and fund fresh capex. With the enhanced borrowing limits, Mr. Kumar is able to facilitate a loan of 75% of Ms. Patel's average forex earnings over the past three years, which is higher than the previous limit of 50%. This allows Ms. Patel to expand her business and create more jobs in the region.
What changed
The maximum permissible ECB for an individual company under the scheme was raised from 50% of average annual export earnings over three years to 75% of that average or 50% of the highest single-year earnings in the same period, whichever is higher. For SPVs lacking a three-year track record, the limit is now 50% of the most recent financial year's export earnings. A new overall cap of USD 3 billion per company or group was introduced.
What it means for you
Banks can now facilitate larger ECB inflows for clients looking to repay rupee loans or fund fresh capex, as the borrowing headroom has increased. The new group-level cap of USD 3 billion prevents excessive concentration of external borrowing. SPVs, often used in infrastructure and project finance, get a clearer path to access ECB even without a long earnings history.
What you must do
Update internal ECB policy and loan processing systems to reflect the new 75% / 50% calculation method.
Advise corporate clients, especially exporters and SPVs, about the enhanced borrowing limits under the scheme.
Ensure that any ECB sanctioned under this scheme does not cause the borrower or group to exceed the USD 3 billion aggregate cap.
Verify that SPV borrowers have completed at least one year from incorporation before applying the relaxed track record provision.
Who it affects
Category-I Authorised Dealer Banks, Export-oriented companies seeking ECB for rupee loan repayment or capex, Special Purpose Vehicles (SPVs) with limited operational history, Corporate groups planning large-scale external commercial borrowings
❓ Common questions
How is the new ECB limit calculated for a company with three years of export earnings?
The limit is the higher of 75% of the average foreign exchange earnings over the past three financial years, or 50% of the highest earnings in any of those three years.
What is the maximum ECB a group can raise under this scheme?
The total ECB availed by an individual company or a group as a whole under this scheme cannot exceed USD 3 billion.
Can a newly formed SPV with less than three years of operations avail ECB under this scheme?
Yes, if the SPV has completed at least one year from incorporation, it can borrow up to 50% of its export earnings from the most recent financial year.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/200
A.P. (DIR Series) Circular No. 26
September 11, 2012
To,
All Category - I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy – Repayment of Rupee loans and/or fresh Rupee capital expenditure – USD 10 billion scheme
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to A.P. (DIR Series) Circular No. 134 dated June 25, 2012 .
2. As per the extant guidelines, the maximum permissible ECB that can be availed of by an individual company under the scheme is limited to 50 per cent of the average annual export earnings realised during the past three financial years.
3. On a review, it has been decided:
(a) to enhance the maximum permissible limit of ECB that can be availed of to 75 per cent of the average foreign exchange earnings realized during the immediate past three financial years or 50 per cent of the highest foreign exchange earnings realized in any of the immediate past three financial years, whichever is higher;
(b) in case of Special Purpose Vehicles (SPVs), which have completed at least one year of existence from the date of incorporation and do not have sufficient track record/past performance for three financial years, the maximum permissible ECB that can be availed of will be limited to 50 per cent of the annual export earnings realized during the past financial year; and
(c) The maximum ECB that can be availed by an individual company or group, as a whole, under this scheme will be restricted to USD 3 billion.
4. All other aspects of the scheme mentioned in A.P. (DIR Series) Circular No. 134 dated June 25, 2012 would remain unchanged.
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 are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/200 · issued 11 Sep 2012. The plain-English explanation above is BankPulse’s own independent summary.
Update internal ECB policy and loan processing systems to reflect the new 75% / 50% calculation method.
📜 Compliance
Advise corporate clients, especially exporters and SPVs, about the enhanced borrowing limits under the scheme.
Ensure that any ECB sanctioned under this scheme does not cause the borrower or group to exceed the USD 3 billion aggregate cap.
Verify that SPV borrowers have completed at least one year from incorporation before applying the relaxed track record provision.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (Category-I Authorised Dealer Banks, Export-oriented companies seeking ECB for rupee loan repayment or capex, Special Purpose Vehicles (SPVs) with limited operational history, Corporate groups planning large-scale external commercial borrowings), your first concrete step on “ECB Scheme: Higher Limits for Rupee Loan Repayment & Capex” is: “Update internal ECB policy and loan processing systems to reflect the new 75% / 50% calculation method.” (RBI issued this 11 Sep 2012).
Action required: Update internal ECB policy and loan processing systems to reflect the new 75% / 50% calculation method.
Action required: Advise corporate clients, especially exporters and SPVs, about the enhanced borrowing limits under the scheme.
Action required: Ensure that any ECB sanctioned under this scheme does not cause the borrower or group to exceed the USD 3 billion aggregate cap.
Action required: Verify that SPV borrowers have completed at least one year from incorporation before applying the relaxed track record provision.
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=7557&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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