Home › Circulars › RBI/2013-14/304

RBI Bans Higher-Cost ECB Refinancing from Oct 2013

Current · Source: Reserve Bank of India · RBI/2013-14/304 · issued 30 Sep 2013 · ~2 min read

Quick answerRBI has stopped allowing borrowers to raise fresh ECB at a higher all-in-cost to refinance or reschedule existing ECB, effective October 1, 2013. Only refinancing at lower all-in-cost remains permitted under automatic or approval route, provided original maturity is maintained or extended.

The rule, in the simplest words

From October 1, 2013, you cannot take a new foreign loan (ECB) with a higher total cost (all-in-cost) to pay off an old foreign loan.
You can still take a new foreign loan to pay off an old one only if the new loan's total cost is lower than the old one's.
When you refinance at a lower cost, you must keep the loan's original end date (maturity) the same or make it longer.
Banks must stop processing any refinancing request where the new loan costs more than the old one, starting October 1, 2013.

How it plays out — a real example

A forex & trade-finance officer in Mumbai reviews a corporate client's request to refinance an existing ECB with a new loan that has a higher interest rate. Remembering the new rule, she explains that from October 1, 2013, this is no longer allowed, and advises the client to find a cheaper loan or extend the original loan's maturity instead.

What changed

Previously, eligible borrowers could refinance or reschedule an existing ECB at a higher all-in-cost under the approval route, as long as the enhanced cost stayed within prescribed ceilings. From October 1, 2013, RBI has discontinued this facility entirely. Refinancing at a lower all-in-cost continues to be allowed under the automatic or approval route, subject to maintaining or extending the original maturity.

What it means for you

Banks can no longer facilitate ECB refinancing deals where the new loan carries a higher interest rate than the original. This tightens the refinancing window, pushing borrowers to seek cheaper funding or extend maturities. Lenders must ensure any refinancing proposal now strictly adheres to the lower all-in-cost condition, or else it will require prior RBI approval and likely be rejected.

What you must do

Update internal ECB processing guidelines to reject any refinancing or rescheduling proposal with higher all-in-cost from October 1, 2013.
Advise corporate clients that only refinancing at lower all-in-cost is permitted, and that original maturity must be maintained or extended.
Review existing ECB refinancing applications in pipeline to ensure compliance with the new restriction before October 1 deadline.
Train AD Category-I bank staff on the revised ECB refinancing rules to avoid processing non-compliant requests.

Who it affects

All Authorised Dealer Category-I banks, Corporate borrowers with existing ECB facilities seeking refinancing, Treasury and forex departments handling ECB transactions

❓ Common questions

Regulatory timeline

Stated effective date effective October 1, 2013
Decoded by BankPulse 2026-06-18 12:26 IST

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

Can we still refinance an ECB if the new loan has a lower interest rate?

Yes, refinancing at a lower all-in-cost remains permitted under the automatic route or approval route, provided the original maturity is maintained or extended.

What happens if a borrower wants to reschedule an ECB at a higher cost after October 1?

Such requests will not be allowed. The facility to raise ECB at higher all-in-cost for refinancing or rescheduling has been discontinued with effect from October 1, 2013.

Does this circular affect any other aspects of ECB policy?

No, all other aspects of ECB policy remain unchanged. Only the specific provision allowing higher-cost refinancing/rescheduling has been withdrawn.

📜 Read the original circular — full text as issued by RBI

RBI/2013-14/304
 A.P.  (DIR Series) Circular No. 59
 September 30, 2013
 To,
 All Authorised Dealer Category - I Banks
 Madam / Sir
 External Commercial Borrowings (ECB) Policy –
 Refinancing / Rescheduling of ECB
 Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A. P. (DIR Series) Circular No. 5 dated August 01, 2005 and A.P. (DIR Series) Circular No. 112 dated April 20, 2012 relating to External Commercial Borrowings ( ECB).
 2. As per the extant guidelines, the eligible borrowers desirous of refinancing an existing ECB can raise fresh ECB at a higher all-in-cost / reschedule an existing ECB at a higher all-in-cost under the approval route subject to the condition that the enhanced all-in-cost does not exceed the all-in-cost ceiling prescribed as per extant guidelines.
 3. On a review, it has been decided to discontinue this facility allowing eligible borrowers to raise ECB at a higher all-in-cost to refinance / reschedule an existing ECB with effect from October 01, 2013.
 4. The scheme of refinance of existing ECB by raising fresh ECB at lower all-in-cost, subject to the condition that the outstanding maturity of the original ECB is either maintained or extended, will continue as hitherto under the automatic route and approval route as the case may be.
 5. All other aspects of ECB policy shall remain unchanged. 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
 (C. D. Srinivasan)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/304 · issued 30 Sep 2013. The plain-English explanation above is BankPulse’s own independent summary.

🧰 Tools — save, print, templates & related

Most relevant forCorporate / Wholesale Banking RM Trade Finance / Forex Operations Compliance Team Treasury Team / ALM Senior Management / Board

🛠 Banker’s toolkit — checklists & reply templates →

Related circulars · Foreign Exchange (FEMA)

RBI raises cash carry limit for travellers to Rs 7,500 Rupee Value of Special Currency Basket Revised to Rs.60.897378 ECB Policy Liberalised: Cost Ceilings Removed, NBFCs & Realty Get Boost ECB: Integrated Township Exemption Removed, Cost Ceilings Tightened RBI Delegates Bank Guarantee Powers for Foreign Airlines to AD Banks

Browse all departments →

Who does what — compliance checklist

💻 IT / Systems

Review existing ECB refinancing applications in pipeline to ensure compliance with the new restriction before October 1 deadline.

📜 Compliance

Update internal ECB processing guidelines to reject any refinancing or rescheduling proposal with higher all-in-cost from October 1, 2013.
Advise corporate clients that only refinancing at lower all-in-cost is permitted, and that original maturity must be maintained or extended.
Train AD Category-I bank staff on the revised ECB refinancing rules to avoid processing non-compliant requests.

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 (All Authorised Dealer Category-I banks, Corporate borrowers with existing ECB facilities seeking refinancing, Treasury and forex departments handling ECB transactions), your first concrete step on “RBI Bans Higher-Cost ECB Refinancing from Oct 2013” is: “Update internal ECB processing guidelines to reject any refinancing or rescheduling proposal with higher all-in-cost from October 1, 2013.” (RBI issued this 30 Sep 2013).

Circular: RBI/2013-14/304 -- RBI Bans Higher-Cost ECB Refinancing from Oct 2013
Issued: 30 Sep 2013
Action required: Update internal ECB processing guidelines to reject any refinancing or rescheduling proposal with higher all-in-cost from October 1, 2013.
Action required: Advise corporate clients that only refinancing at lower all-in-cost is permitted, and that original maturity must be maintained or extended.
Action required: Review existing ECB refinancing applications in pipeline to ensure compliance with the new restriction before October 1 deadline.
Action required: Train AD Category-I bank staff on the revised ECB refinancing rules to avoid processing non-compliant requests.
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.

Loading comments…

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=8482&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.