Current · Source: Reserve Bank of India · RBI/2025-26/221 · issued 16 Feb 2026 · ~2 min read
Quick answerRBI has notified the final Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026, consolidating ECB and INR borrowing rules. Authorised Dealer banks must follow the amended regulations and note that earlier master direction paragraphs and FAQs on these topics stand deleted.
The rule, in the simplest words
Banks must follow the new Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 for [External Commercial Borrowings (ECB)] and [INR (Indian Rupee) borrowing] rules.
The new regulations combine [ECB] and [INR borrowing] rules into one place, replacing old master directions and FAQs.
Banks should update their internal manuals and training materials to reflect the changes and ensure compliance with the new regulations.
The changes affect [Authorised Dealer Category I Banks], borrowers using [ECB], and residents borrowing in [INR] from non-residents.
How it plays out — a real example
A foreign exchange manager at a bank in Mumbai must review the new regulations and update the bank's internal manuals to ensure compliance with the consolidated ECB and INR borrowing rules. This means they will need to remove references to the old master directions and FAQs, and train staff on the new regulatory text. By doing so, they can ensure that all new ECB and INR borrowing transactions are processed correctly and in line with the amended Regulations.
What changed
The RBI has published the final amendment to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, which was initially released as a draft in October 2025. The amendment consolidates ECB provisions from the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations and INR borrowing provisions from the Master Direction on Borrowing and Lending between Residents and NRIs/PIOs into the Regulations themselves. Consequently, paragraphs 1-12 of the ECB Master Direction, paragraph 2 of the INR borrowing Master Direction, and Part I of the FAQs on ECB and Trade Credits have been deleted.
What it means for you
For banks, the key change is that the core rules for ECB and INR borrowing from non-residents are now directly in the Regulations, not in separate master directions. This means banks must refer to the amended Regulations for compliance, and the deleted master direction paragraphs and FAQs are no longer authoritative. Banks should update their internal manuals and training materials to reflect this consolidation and ensure all ECB and INR borrowing transactions are guided by the new regulatory text.
What you must do
Review the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 in full to understand the consolidated ECB and INR borrowing rules.
Update your internal compliance manuals, checklists, and training materials to remove references to the deleted master direction paragraphs and FAQs.
Inform your AD Category I bank staff and relevant customers about the amended regulations and the deletion of the earlier guidance.
Ensure all new ECB and INR borrowing transactions are processed in line with the amended Regulations, not the old master directions.
Who it affects
All Authorised Dealer Category I Banks, Borrowers availing External Commercial Borrowings (ECB), Residents borrowing in INR from Non-Resident Indians (NRIs) / Persons of Indian Origin (PIOs), Compliance and legal teams handling foreign exchange transactions
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-17 17:00 IST
Amends — RBI Circular on Foreign Exchange Management (June 2014)
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What exactly has been deleted from the earlier master directions?
Paragraphs 1 to 12 of the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, paragraph 2 of the Master Direction on Borrowing and Lending in INR between Residents and NRIs/PIOs, and Part I of the FAQs on ECB and Trade Credits have been deleted.
Do I need to follow the old master directions for ECB or INR borrowing now?
No. The RBI has consolidated the relevant provisions into the amended Regulations. The deleted paragraphs and FAQs are no longer valid. You must follow the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026.
When did the amendment come into effect?
The amendment was published in the official gazette on February 16, 2026, and the circular was issued on the same date. Banks are directed to be guided by the amended Regulations immediately.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
AmendsRBI Circular on Foreign Exchange Management (June 2014)
📜 Read the original circular — full text as issued by RBI
RBI/2025-26/221
A.P. (DIR Series) Circular No. 22
February 16, 2026
All Authorised Dealer Category I Banks,
Madam / Sir,
Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026
The Reserve Bank of India had released draft amendment to Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 pertaining to changes in the External Commercial Borrowing (ECB) Framework on October 03, 2025 for public feedback. The Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 dated February 09, 2026 have now been published in the official gazette on February 16, 2026. Authorised Dealer Category I banks are directed to be guided by the amended Regulations while facilitating borrowing and lending transactions governed by these Regulations.
2. Provisions pertaining to ECB contained in Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations and related provisions pertaining to borrowing in Indian Rupees (INR) by persons resident in India contained in Master Direction – Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/ Persons of Indian Origin have been reviewed and consolidated in the Regulations.
3. In view of the above, the following amendments are being made to the aforesaid master directions and Frequently Asked Questions (FAQs):
(a) Para 1 to 12 of Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations shall be deleted;
(b) Para 2 of Master Direction – Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/ Persons of Indian Origin shall be deleted; and
(c) Part I of FAQs on External Commercial Borrowings (ECB) and Trade Credits shall be deleted.
4. Authorised Dealer banks may bring the contents of the circular to the notice of their customers/ constituents concerned.
5. The directions contained in this circular have been issued under sections 10(4), 11(1) 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,
(Dr. Aditya Gaiha)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/221 · issued 16 Feb 2026. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Authorised Dealer Category I Banks, Borrowers availing External Commercial Borrowings (ECB), Residents borrowing in INR from Non-Resident Indians (NRIs) / Persons of Indian Origin (PIOs), Compliance and legal teams handling foreign exchange transactions), your first concrete step on “RBI Notifies Final ECB & INR Borrowing Rules” is: “Review the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 in full to understand the consolidated ECB and INR borrowing rules.” (RBI issued this 16 Feb 2026).
Action required: Review the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 in full to understand the consolidated ECB and INR borrowing rules.
Action required: Update your internal compliance manuals, checklists, and training materials to remove references to the deleted master direction paragraphs and FAQs.
Action required: Inform your AD Category I bank staff and relevant customers about the amended regulations and the deletion of the earlier guidance.
Action required: Ensure all new ECB and INR borrowing transactions are processed in line with the amended Regulations, not the old master directions.
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=13305&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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