RBI Revises Foreign Exchange Management Rules: New Regulations Make External Commercial Borrowings Easier

The Reserve Bank of India (RBI) has made certain changes to the framework governing external commercial borrowings (ECB) and cross border lending transactions by amending the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. The revised rules were notified by way of Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026.  

The circular, issued on February 16, 2026, directs all Authorised Dealer (AD) Category I banks to abide by the amended regulations while facilitating transactions of borrowings and lending covered under the regulations. 

Background of the Amendment  

RBI had earlier issued a draft amendment on October 3, 2025 for public inputs. The draft proposed changes to the ECB framework under the 2018 Regulations. After examining the responses, the last amendment as on February 9, 2026 was formally notified.  

The amendment mainly restructures the way provisions relating to ECB, trade credits and certain rupee borrowing transactions are placed within the regulatory structure.

What Changed in the ECB Framework

According to the circular, provisions relating to ECB, which were earlier contained in the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, have been reviewed and consolidated into the amended regulations.

As part of this restructuring, paragraphs 1-12 of this master direction have been deleted. In addition, Part I of the Frequently Asked Questions (FAQs) on ECB and trade credits has also been deleted. This means that key provisions governing ECB are now housed directly within the main regulations, instead of being spread across separate master directions and explanatory documents.

Changes to Rupee Borrowing Provisions

The amendment also has implications for provisions related to borrowing in rupees between persons resident in India and non-resident Indians (NRIs) or persons of Indian origin (PIOs). Previously such provisions were included in a separate Master Direction on Borrowing and Lending transactions in Indian Rupee between persons resident in India and NRIs or PIOs. 

Paragraph 2 of that Master Direction has now been deleted, with related provisions consolidated into the amended regulations.

Regulatory Directions to Banks

The circular makes it clear that AD Category I banks must abide by the amended regulations while handling borrowing and lending transactions under the Foreign Exchange Management Act (FEMA), 1999. Banks have also been asked to bring the contents of the circular to the notice of their customers and constituents concerned.