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    Question

    In the External Commercial Borrowing regulatory changes

    introduced by the RBI in 2026, which of the following structural reforms removed restrictions on borrowing cost?
    A Expansion of recognised lenders Correct Answer Incorrect Answer
    B Removal of all-in-cost cap Correct Answer Incorrect Answer
    C Rationalisation of maturity restrictions Correct Answer Incorrect Answer
    D Expansion of eligible borrowers Correct Answer Incorrect Answer
    E Simplification of reporting requirements Correct Answer Incorrect Answer

    Solution

    One of the major structural reforms introduced in the revised ECB framework was the removal of the all-in-cost cap. Earlier, ECB borrowings were subject to a ceiling on the total borrowing cost, including interest payments and associated charges. With the removal of this cap, there is no longer a fixed restriction on borrowing cost under the new regulations. This reform gives borrowers greater flexibility to negotiate borrowing terms with lenders based on prevailing international market conditions. The removal of the cost cap also resulted in easing refinancing provisions and reducing regulatory compliance requirements for authorised dealer banks.

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