Current · Source: Reserve Bank of India · RBI/2022-23/98 · issued 01 Aug 2022 · ~2 min read
Quick answerRBI has raised the automatic route limit for ECBs from USD 750 million to USD 1.5 billion per financial year and increased the all-in-cost ceiling by 100 bps for investment-grade borrowers, effective until December 31, 2022.
The rule, in the simplest words
Indian companies can now borrow up to $1.5 billion from foreign lenders without asking RBI for permission each time (automatic route).
Only companies with a high credit rating (investment grade) from Indian rating agencies can pay up to 1% more interest (all-in-cost ceiling) to attract foreign lenders.
These special rules are only for loans taken before December 31, 2022, so act fast.
Banks must check the borrower's credit rating before allowing the higher interest limit.
How it plays out — a real example
A forex & trade-finance officer in Indore is processing an ECB request from a local NBFC. The NBFC has an 'AA' rating from an Indian credit rating agency, so the officer applies the new $1.5 billion automatic route limit and allows the NBFC to pay 100 bps more interest to a foreign lender, knowing this relaxation expires on December 31, 2022.
What changed
The automatic route limit for external commercial borrowings (ECBs) has been doubled from USD 750 million to USD 1.5 billion per financial year. Additionally, the all-in-cost ceiling for ECBs has been raised by 100 basis points, but this benefit is limited to eligible borrowers with investment-grade ratings from Indian credit rating agencies.
What it means for you
Indian banks and corporates can now access larger ECB amounts under the automatic route without prior RBI approval, easing funding for expansion or refinancing. The higher cost ceiling allows investment-grade borrowers to pay more interest, potentially attracting foreign lenders, but other borrowers must stick to existing caps. This is a temporary relaxation valid only until December 31, 2022.
What you must do
Update internal ECB processing systems to reflect the new automatic route limit of USD 1.5 billion per financial year.
Verify borrower credit ratings from Indian CRAs before applying the enhanced all-in-cost ceiling.
Advise clients on the temporary nature of these relaxations, valid only for ECBs raised by December 31, 2022.
Ensure compliance with FEMA regulations and updated Master Direction No. 5 for all ECB transactions.
Who it affects
Category-I Authorised Dealer Banks, Eligible ECB borrowers (corporates, NBFCs, etc.), Indian Credit Rating Agencies, Foreign lenders and investors
❓ Common questions
What is the new automatic route limit for ECBs?
The limit has been increased from USD 750 million to USD 1.5 billion per financial year, effective from August 1, 2022, until December 31, 2022.
Who can benefit from the higher all-in-cost ceiling?
Only eligible borrowers with investment-grade ratings from Indian Credit Rating Agencies (CRAs) can avail the 100 bps increase in the all-in-cost ceiling. Other borrowers must adhere to the existing ceiling.
Is this relaxation permanent?
No, these measures are temporary and apply only to ECBs raised on or before December 31, 2022.
📜 Read the original circular — full text as issued by RBI
RBI/2022-23/98
A.P. (DIR Series) Circular No. 11
August 1, 2022
To
All Category-I Authorised Dealer Banks
Madam / Sir,
External Commercial Borrowings (ECB) Policy – Liberalisation Measures
Attention is invited to paragraph 2.2 of FED Master Direction No.5 on External Commercial Borrowings, Trade Credits and Structured Obligations, dated March 26, 2019 (as amended from time to time), in terms of which eligible ECB borrowers are allowed to raise ECB up to USD 750 million or equivalent per financial year under the automatic route, and paragraph 2.1.vi. ibid, wherein the all-in-cost ceiling for ECBs has been specified.
2. As announced in paragraph five of the press release on “Liberalisation of Forex Flows” dated July 06, 2022 , it has been decided, in consultation with the Central Government, to:
i) increase the automatic route limit from USD 750 million or equivalent to USD 1.5 billion or equivalent.
ii) increase the all-in-cost ceiling for ECBs, by 100 bps. The enhanced all-in-cost ceiling shall be available only to eligible borrowers of investment grade rating from Indian Credit Rating Agencies (CRAs). Other eligible borrowers may raise ECB within the existing all-in-cost ceiling, as hitherto.
The above relaxations would be available for ECBs to be raised till December 31, 2022.
3. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.
4. The aforesaid Master Direction No. 5, is being updated to reflect these changes.
5. Necessary amendments to the relevant regulations have been made through the Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2022, notified vide notification No. FEMA.3(R)(3)/2022-RB dated July 29, 2022 .
6. The directions contained in this circular have been issued under section 10(4) and 11(2) 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,
(Ajay Kumar Misra)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2022-23/98 · issued 01 Aug 2022. The plain-English explanation above is BankPulse’s own independent summary.
Update internal ECB processing systems to reflect the new automatic route limit of USD 1.5 billion per financial year.
📜 Compliance
Verify borrower credit ratings from Indian CRAs before applying the enhanced all-in-cost ceiling.
Advise clients on the temporary nature of these relaxations, valid only for ECBs raised by December 31, 2022.
Ensure compliance with FEMA regulations and updated Master Direction No. 5 for all ECB transactions.
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, Eligible ECB borrowers (corporates, NBFCs, etc.), Indian Credit Rating Agencies, Foreign lenders and investors), your first concrete step on “RBI Doubles ECB Automatic Route Limit to $1.5 Billion, Eases Cost Ceiling” is: “Update internal ECB processing systems to reflect the new automatic route limit of USD 1.5 billion per financial year.” (RBI issued this 01 Aug 2022).
Action required: Update internal ECB processing systems to reflect the new automatic route limit of USD 1.5 billion per financial year.
Action required: Verify borrower credit ratings from Indian CRAs before applying the enhanced all-in-cost ceiling.
Action required: Advise clients on the temporary nature of these relaxations, valid only for ECBs raised by December 31, 2022.
Action required: Ensure compliance with FEMA regulations and updated Master Direction No. 5 for all ECB transactions.
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=12366&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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