The Reserve Bank of India (RBI), in consultation with the government, has decided to have a rule-based dynamic limit for outstanding stock of External Commercial Borrowings (ECBs) at 6.5% of Gross domestic product (GDP) at current market prices.
The RBI has said that based on the GDP figures at March-end 2018, the soft limit works out to $160 billion for the fiscal year 2018-19. The outstanding stock of ECBs as on September 30, 2018, stood at $126.29 billion.
ECBs refer to commercial loans in the form of bank loans, securitised instruments (floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares), buyers’ credit, suppliers’ credit availed of from non-resident lenders with a minimum average maturity of 3 years.