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Question

In August 2022, RBI increased the limit of ECB that eligible borrower can raise per financial year under the automatic route to _______. This relaxation is available till December 31, 2022.

A USD 500 million or equivalent Correct Answer Incorrect Answer
B USD 1.5 billion or equivalent Correct Answer Incorrect Answer
C USD 750 million or equivalent Correct Answer Incorrect Answer
D USD 1 billion or equivalent Correct Answer Incorrect Answer
E No limit Correct Answer Incorrect Answer

Solution

As per ECB framework 2019, all eligible borrowers can raise ECBs up to USD 750 million or equivalent per financial year under the automatic route.    However in July 2022, RBI announced certain  “Liberalisation of Forex Flows”, in consultation with the Central Government, to:

  •  increase the automatic route limit from USD 750 million or equivalent to USD 1.5 billion or equivalent.
  • 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.

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