RBI limits total outstanding of external commercial borrowings to 6.5% of GDP

The Reserve Bank of India (RBI) on Thursday announced a cap on the outstanding stock of external commercial borrowings (ECB) at 6.5 percent of GDP at current market prices.

Press Trust of India December 20, 2018 19:11:13 IST
RBI limits total outstanding of external commercial borrowings to 6.5% of GDP

Mumbai: The Reserve Bank of India (RBI) on Thursday announced a cap on the outstanding stock of external commercial borrowings (ECB) at 6.5 percent of GDP at current market prices.

RBI limits total outstanding of external commercial borrowings to 65 of GDP

Representational image. News18.

Based on the gross domestic product (GDP) figures at March-end 2018, the soft limit works out to $160 billion for the current financial year, the RBI said in a statement.

"The outstanding stock of ECB as on 30 September, 2018, stood at $126.29 billion," it said.

The decision to have a "rule-based dynamic limit" for outstanding stock of ECB at 6.5 percent of GDP at current market prices has been taken in consultation with the government, the RBI added.

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.

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