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AD Cat-I Banks: Overseas Borrowings for On-Lending in Foreign Currency

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2022-23/88 · issued 07 Jul 2022 · ~1 min read
Quick answerRBI allows AD Cat-I banks to use overseas foreign currency borrowings raised from July 8 to October 31, 2022, for on-lending in foreign currency to domestic constituents, subject to ECB end-use norms.

What changed

Previously, AD Cat-I banks could raise overseas foreign currency borrowings but were restricted in using those funds for on-lending in foreign currency within India. This circular temporarily permits such on-lending for borrowings raised during the specified window, aligning end-use with ECB guidelines.

What it means for you

Banks can now deploy overseas borrowings to meet foreign currency credit demand from Indian borrowers, potentially improving forex liquidity and offering competitive FCY loan rates. However, strict adherence to ECB end-use restrictions is mandatory, limiting permissible purposes like import of capital goods, infrastructure, or working capital for exporters.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

Authorised Dealer Category-I banks, Indian constituents seeking foreign currency loans, Treasury and forex operations teams at AD Cat-I banks

❓ Common questions

Regulatory timeline

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

What is the validity period for raising overseas borrowings under this circular?

The borrowings must be raised between July 8, 2022, and October 31, 2022, both dates inclusive.

Can we lend these funds in rupees instead of foreign currency?

No, the circular specifically permits lending in foreign currency only to constituents in India.

What happens after the overseas borrowing matures?

The facility to on-lend is available only until the maturity or repayment of the overseas foreign currency borrowing, after which no new on-lending is allowed under this window.

📜 Read the original circular — full text as issued by RBI
RBI/2022-23/88 A. P. (DIR Series) Circular No. 08 July 07, 2022 All Authorised Dealer Category-I Banks Madam/Sir, Overseas foreign currency borrowings of Authorised Dealer Category-I banks Attention of Authorised Dealer Category-I (AD Cat-I) banks is invited to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 [ Notification no. FEMA 3(R)/2018-RB dated December 17, 2018 ] and Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016 , as amended from time to time. 2. As announced in paragraph 4 of the press release on “Liberalisation of Forex Flows” dated July 06, 2022 , AD Cat-I banks can utilise the funds raised from overseas foreign currency borrowings between July 08, 2022 and October 31, 2022 (both dates included) in terms of paragraph Part-C(5)(a) of the Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016 , as amended from time to time, for lending in foreign currency to constituents in India. Such lending shall be subject to the end-use prescriptions as applicable to External Commercial Borrowings (ECBs) in terms of paragraph 2.1(viii) of the Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations dated March 26, 2019 , as amended from time to time. This facility will be available till the maturity / repayment of the overseas foreign currency borrowings. 3. 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, (Dimple Bhandia) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2022-23/88 · issued 07 Jul 2022. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12356&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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