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RBI Eases Overseas Borrowing Norms for AD Banks

Current · Source: Reserve Bank of India · RBI/2013-14/323 · issued 10 Oct 2013 · ~2 min read

Quick answerRBI has amended FEMA rules to allow AD Category-I banks to borrow from their head office, overseas branches, correspondents, or any other permitted entity up to 100% of unimpaired Tier I capital or USD 10 million, whichever is higher. This replaces the earlier restriction to only head office, branches, and correspondents.

The rule, in the simplest words

Banks can borrow from overseas up to 100% of their Tier I capital (a measure of financial strength) or USD 10 million, whichever is higher.
The list of lenders is expanded to include any entity the RBI allows, not just head office or branches.
Borrowings from international or multilateral groups are allowed only until November 30, 2013, and only for normal banking work, not to boost capital.
These borrowings can use RBI's special swap facility to get cheaper funds.
All rules come from FEMA and must be followed strictly.

How it plays out — a real example

Rohan, the Treasurer at a mid-sized AD bank, sees a funding gap. He checks the new circular and decides to borrow $8 million from an overseas correspondent, within his Tier I capital limit. He ensures the loan is for general banking operations and applies for RBI's swap facility to reduce costs, completing the deal before the November deadline.

What changed

The RBI amended Regulation 4(2)(i) of FEMA 3/RB-2000 to expand the list of entities from which AD Category-I banks can borrow overseas funds. Previously, borrowings were limited to head office, overseas branches, and correspondents; now, any entity permitted by RBI is allowed. Additionally, a temporary permission was granted for borrowings from international/multilateral financial institutions until November 30, 2013, for general banking business, not capital augmentation.

What it means for you

This gives AD banks greater flexibility to access overseas funds, potentially lowering funding costs and diversifying funding sources. The concessional swap facility from RBI makes these borrowings more attractive. Banks must ensure compliance with conditions from earlier circulars and use funds only for general banking business, not for capital augmentation.

What you must do

Review your overseas borrowing limits against the updated 100% Tier I capital or USD 10 million threshold.
Ensure any new borrowings from entities other than head office/branches/correspondents are from RBI-permitted entities.
If borrowing from international/multilateral institutions, complete transactions before November 30, 2013, and use funds only for general banking business.
Check eligibility for RBI's concessional swap facility as per circulars 40 and 54 of 2013.
Maintain documentation to demonstrate compliance with FEMA and RBI conditions.

Who it affects

AD Category-I banks, Treasury and ALM desks of banks, Compliance and international banking divisions

❓ Common questions

Regulatory timeline

Stated effective date effective October 1, 2013
Decoded by BankPulse 2026-08-02 04:05 IST

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

What is the new borrowing limit for AD banks?

AD Category-I banks can borrow up to 100% of their unimpaired Tier I capital or USD 10 million, whichever is higher, from permitted entities.

Can banks borrow from any overseas entity now?

Only from entities permitted by RBI. The amendment expands the list beyond head office, branches, and correspondents, but not to all entities.

Is there a deadline for borrowings from international/multilateral institutions?

Yes, such borrowings are allowed only up to November 30, 2013, and must be for general banking business, not capital augmentation.

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

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 26 kb ) Overseas Foreign Currency Borrowings by Authorised Dealer Banks RBI/2013-14/323 A.P. (DIR Series) Circular No. 61 October 10, 2013 To All Category - I Authorised Dealer Banks Madam / Sir, Overseas Foreign Currency Borrowings by Authorised Dealer Banks Attention of Authorised Dealer Category I banks is invited to Regulation no. (4)(2)(i) of Notification No. FEMA 3/RB-2000 dated May 3, 2000 as amended from time to time and A.P.(DIR Series) circular no. 23 dated October 15, 2008 in terms of which, inter alia, AD Category - I banks may borrow funds from their Head Office, overseas branches and correspondents and avail overdraft in the nostro accounts up to a limit of hundred per cent of their unimpaired Tier I capital as at the close of the previous quarter or USD 10 million (or its equivalent), whichever is higher (excluding borrowings for financing of export credit in foreign currency and capital instruments). 2. With a view to providing greater flexibility to AD Category - I banks in seeking access to overseas funds, Reserve Bank has amended Regulation no. (4)(2)(i) vide Notification No.FEMA.288/2013-RB dated September 26, 2013 published in the Official Gazette vide G.S.R.No.668 (E) on October 1, 2013 . Henceforth, authorised dealers may borrow from their Head Office or overseas branches or correspondents outside India or any other entity as permitted by Reserve Bank up to hundred per cent of its unimpaired Tier I capital or USD 10 million, whichever is higher, subject to such conditions as the Reserve Bank may direct. A copy of the amendment notification is placed as annex to this circular. 3. Accordingly, permission is hereby granted to AD Category I banks to borrow from international / multilateral financial institutions for a limited period up to November 30, 2013. Such borrowings should be for the purpose of general banking business and not for capital augmentation and shall be subject to the conditions stipulated in the A.P. (DIR Series) circulars no. 40, 2013 dated September 10, 2013 . Further, such borrowings shall be eligible for the concessional swap facility of RBI as per A.P. (DIR Series) circulars no. 40, 2013 dated September 10, 2013 and 54 dated September 25, 2013 . 4. 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 (Rudra Narayan Kar) Chief General Manager-in-Charge 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/323 · issued 10 Oct 2013. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

🏦 Branch Manager

Ensure any new borrowings from entities other than head office/branches/correspondents are from RBI-permitted entities.

💻 IT / Systems

Review your overseas borrowing limits against the updated 100% Tier I capital or USD 10 million threshold.

📜 Compliance

If borrowing from international/multilateral institutions, complete transactions before November 30, 2013, and use funds only for general banking business.
Check eligibility for RBI's concessional swap facility as per circulars 40 and 54 of 2013.
Maintain documentation to demonstrate compliance with FEMA and RBI conditions.

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 (AD Category-I banks, Treasury and ALM desks of banks, Compliance and international banking divisions), your first concrete step on “RBI Eases Overseas Borrowing Norms for AD Banks” is: “Review your overseas borrowing limits against the updated 100% Tier I capital or USD 10 million threshold.” (RBI issued this 10 Oct 2013).

Circular: RBI/2013-14/323 -- RBI Eases Overseas Borrowing Norms for AD Banks
Issued: 10 Oct 2013
Action required: Review your overseas borrowing limits against the updated 100% Tier I capital or USD 10 million threshold.
Action required: Ensure any new borrowings from entities other than head office/branches/correspondents are from RBI-permitted entities.
Action required: If borrowing from international/multilateral institutions, complete transactions before November 30, 2013, and use funds only for general banking business.
Action required: Check eligibility for RBI's concessional swap facility as per circulars 40 and 54 of 2013.
Action required: Maintain documentation to demonstrate compliance with FEMA and RBI conditions.
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.

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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=8507&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.