ECB Scheme Expanded to Hotel Sector for Rupee Loan Repayment
Current · Source: Reserve Bank of India · RBI/2012-13/387 · issued 21 Jan 2013 · ~2 min read
Quick answerRBI has expanded the USD 10 billion ECB scheme to include hotel companies with project cost of INR 250 crore or more, allowing them to borrow externally for repaying domestic rupee loans or fresh capex. AD Category-I banks must certify project cost when forwarding applications.
The rule, in the simplest words
Hotel companies with a project cost of INR 250 crore or more can now borrow externally to repay domestic rupee loans or fresh capex.
AD Category-I banks must verify and certify the project cost when forwarding ECB applications from hotel companies.
Hotel companies must have a project cost of INR 250 crore or more to be eligible for this scheme.
How it plays out — a real example
Rahul, a forex & trade-finance officer in Indore, helps a hotel owner, Mr. Kumar, to apply for an ECB to repay his domestic rupee loan. Rahul verifies and certifies the project cost of Mr. Kumar's hotel expansion, which is INR 300 crore, and forwards the application to RBI. RBI approves the ECB, allowing Mr. Kumar to replace his expensive domestic loan with a cheaper foreign loan, reducing his financial burden.
What changed
Previously, only manufacturing and infrastructure companies that were consistent foreign exchange earners could access ECBs under this scheme for rupee loan repayment or fresh capex. Now, hotel sector companies with a total project cost of INR 250 crore or more are also eligible, regardless of their location.
What it means for you
Banks can now process ECB applications from hotel companies meeting the project cost threshold, potentially reducing their domestic loan exposure as these borrowers replace rupee debt with cheaper foreign borrowing. AD banks must verify and certify the project cost at the time of forwarding the application to RBI, adding a due diligence step.
What you must do
Update internal ECB eligibility checklists to include hotel sector companies with project cost of INR 250 crore or more.
Ensure AD Category-I branches verify and certify the project cost before forwarding any hotel sector ECB application to RBI.
Communicate this circular to all concerned constituents and customers in the hotel industry.
Monitor that all other scheme conditions (e.g., consistent foreign exchange earner status) remain unchanged for these new borrowers.
Who it affects
AD Category-I banks, Hotel companies with project cost of INR 250 crore or more, Manufacturing and infrastructure firms already eligible under the scheme
❓ Common questions
What is the minimum project cost for a hotel company to be eligible under this ECB scheme?
The hotel company must have a total project cost of INR 250 crore or more, as certified by the AD bank at the time of forwarding the ECB application to RBI.
Does this circular change any other conditions of the USD 10 billion ECB scheme?
No, all other aspects of the scheme remain unchanged. Only the eligibility has been expanded to include the hotel sector.
Are hotel companies located anywhere in India eligible, or only in certain areas?
The circular specifies eligibility 'irrespective of geographical location,' so hotel companies anywhere in India can apply if they meet the project cost threshold.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/387
A.P. (DIR Series) Circular No.78
January 21, 2013
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 and A.P. (DIR Series) Circular No. 26 dated September 11, 2012 .
2. As per the extant guidelines, Indian companies in the manufacturing and infrastructure sector (as defined under the extant ECB policy), which are consistent foreign exchange earners, are allowed to avail of ECBs for repayment of outstanding Rupee loan(s) availed of from the domestic banking system and / or for fresh Rupee capital expenditure.
3. On a review, it has been decided to include Indian companies in the hotel sector (with a total project cost of INR 250 crore or more), irrespective of geographical location as eligible borrowers under this scheme. AD may certify the project cost at the time of forwarding the ECB application to the Reserve Bank.
4. All other aspects of the scheme shall remain unchanged and the amended ECB policy will come into force with immediate effect and is subject to review based on the experience gained in this regard.
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/2012-13/387 · issued 21 Jan 2013. The plain-English explanation above is BankPulse’s own independent summary.
Ensure AD Category-I branches verify and certify the project cost before forwarding any hotel sector ECB application to RBI.
📜 Compliance
Update internal ECB eligibility checklists to include hotel sector companies with project cost of INR 250 crore or more.
Communicate this circular to all concerned constituents and customers in the hotel industry.
Monitor that all other scheme conditions (e.g., consistent foreign exchange earner status) remain unchanged for these new borrowers.
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 (AD Category-I banks, Hotel companies with project cost of INR 250 crore or more, Manufacturing and infrastructure firms already eligible under the scheme), your first concrete step on “ECB Scheme Expanded to Hotel Sector for Rupee Loan Repayment” is: “Update internal ECB eligibility checklists to include hotel sector companies with project cost of INR 250 crore or more.” (RBI issued this 21 Jan 2013).
Circular: RBI/2012-13/387 -- ECB Scheme Expanded to Hotel Sector for Rupee Loan Repayment
Issued: 21 Jan 2013
Action required: Update internal ECB eligibility checklists to include hotel sector companies with project cost of INR 250 crore or more.
Action required: Ensure AD Category-I branches verify and certify the project cost before forwarding any hotel sector ECB application to RBI.
Action required: Communicate this circular to all concerned constituents and customers in the hotel industry.
Action required: Monitor that all other scheme conditions (e.g., consistent foreign exchange earner status) remain unchanged for these new borrowers.
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=7818&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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