Reserve Bank of India (RBI) has revised external commercial borrowings (ECB) norms to allow companies to raise up to $1 bn or 300 per cent of their net worth, whichever is higher, replacing the previous annual cap of $750 mn. The change is designed to provide greater flexibility to firms seeking overseas funding while explicitly excluding entities regulated by financial sector regulators, such as non-banking financial companies, from the enhanced borrowing limit. The bank has also clarified eligibility and usage rules to balance market access with prudential safeguards. Under the revised framework, eligible borrowers must raise ECBs with a minimum average maturity period of three years. Manufacturing sector companies have been permitted to access shorter tenors of one to three years provided that their total outstanding amount does not exceed $150 mn. The apex bank has further removed prescriptive limits on the cost of borrowing and stated that pricing should be market determined, while keeping a ceiling for fixed-rate instruments where the floating rate plus the corresponding swap spread must not exceed the prescribed limit. The guidelines widen the pool of eligible borrowers and lenders and contemplate allowing entities under restructuring or investigation to raise funds through ECBs, subject to other regulatory conditions. Proceeds from ECBs may be utilised in deposits or other debt instruments with maturities of up to one year, but the bank has retained clear prohibitions on certain end uses. Funds raised overseas must not be directed to chit funds, Nidhi companies, real estate business, construction of farmhouses or investment in the stock market among other restricted activities. The revisions are likely to alter the funding calculus for corporate treasuries and external investors by improving access to offshore credit while maintaining targeted restrictions to curb misuse. Firms will need to weigh the benefits of larger limits against compliance obligations and the prescribed maturity and end use constraints.