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
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.