TaxTMI 
TaxTMI 
Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026
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....er (LRN) has been obtained before these regulations coming into effect shall continue in compliance with the then applicable regulations, except reporting which shall be undertaken as per the amended regulations. 2. Amendment to Regulation 2 - In the Principal Regulations, regulation 2 shall be substituted by the following regulation, namely:- "2. Definitions - (1) In these regulations, unless the context otherwise requires: (a) "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999); (b) "arm's length basis" means a transaction between two related parties that is conducted as if the transacting parties were unrelated, so that there is no conflict of interest; (c) "Authorised Bank" shall have the same meaning as assigned to it in the Foreign Exchange Management (Deposit) Regulations, 2016; (d) "Authorised Dealer (AD)" means a person authorised as an Authorised Dealer under sub-section (1) of section 10 of the Act; (e) "benchmark rate" means any widely accepted interbank rate or Alternative Reference Rate (ARR) of 6-month tenor, applicable to the currency of borrowing, in case of foreign currency (FCY) external commerc....
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....in the Issue of Foreign Currency Exchangeable Bonds Scheme, 2008; (p) "Housing Finance Institution" shall have the same meaning as assigned to it in the National Housing Bank Act, 1987 (53 of 1987); (q) "Indian Entity" means a company incorporated in India under the Companies Act, 2013 (18 of 2013) or a body corporate established in India under a Central / State Act or a Limited Liability Partnership formed and registered in India under the Limited Liability Partnership Act, 2008; (r) "Industrial Park" means a project in which quality infrastructure in the form of plots of developed land or built-up space or a combination with common facilities is developed and made available to all the allotee units for the purpose of industrial activity; Explanation : Common Facilities refers to facilities available for all the units located in the industrial park, and include facilities of power, roads (including approach roads), railway line / sidings including electrified railway lines and connectivity to the main railway line, water supply and sewerage, common effluent treatment, common testing, telecom services, air conditioning, common facility buildings,....
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.... (not amounting to transfer) of land or immovable property for the following purposes: (i) construction and development of industrial parks, integrated townships and SEZ; (ii) development of new industrial project, modernisation and expansion of existing units; (iii) any activity under 'infrastructure sector'; (iv) construction-development project; (v) commercial or residential properties for own use of the borrower; (vi) real estate broking services. Explanation: (a) Construction-development projects includes development of townships, construction of residential /commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, townships; (b) Transfer, in relation to real estate business includes,- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) any transaction involving the allowing of the possession of any immovable property to be taken or retained in ....
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....n case of a borrowing for construction-development project, the borrower shall sell plots only after ensuring development of trunk infrastructure i.e. roads, water supply, street lighting, drainage and sewerage. (ii) in case of borrowing for industrial parks, such parks shall comprise of a minimum of 10 units with no single unit occupying more than 50 percent of the allocable area and the minimum percentage of the area to be allocated for industrial activity shall not be less than 66 percent of the total allocable area. Explanation: "Allocable area" in the Industrial Park means- (i) in the case of plots of developed land - the net site area available for allocation to the units, excluding the area for common facilities. (ii) in the case of built-up space - the floor area and built-up space utilized for providing common facilities. (iii) in the case of a combination of developed land and built-up space - the net site and floor area available for allocation to the units excluding the site area and built-up space utilized for providing common facilities. (d) Agricultural and animal husbandry, except - (i) Floriculture, hor....
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....dual may borrow in INR from an NRI or a relative who is an OCI cardholder for utilization in India, subject to the following terms and conditions: (a) The amount of loan should be received either by inward remittance from outside India or by debit to NRE / NRO / FCNR(B) / SNRR account of the lender; and (b) Borrowing shall be on non-repatriation basis; i.e. payment of interest and repayment of principal shall be made only to the NRO account of the lender." 5. In the Principal Regulations, Schedule I shall be substituted by the following, namely:- "SCHEDULE I [See Regulations 4(A)(iv), 4(B)(i), 4(B)(iv), 6(A), 6(B)(i), 6(B)(vii)] External Commercial Borrowing (ECB) Framework 1. Eligible borrowers - (1) Any person resident in India (other than an individual) that is incorporated, established or registered under a Central or State Act is an eligible borrower, subject to the condition that such person is permitted for ECB in terms of applicable Act(s). (2) An eligible borrower that is under a restructuring scheme or corporate insolvency resolution process may raise ECB only if specifically permitted under the re....
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.... original maturity up to three years, raised in terms of these Regulations; (b) Export advance received in terms of these Regulations and Foreign Exchange Management (Export of Goods & Services) Regulations, 2015; (c) Investments received in terms of the Foreign Exchange Management (Debt Instruments) Regulations, 2019; (d) Investments received through Convertible Notes issued in terms of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019; and (e) Investments received from Foreign Venture Capital Investor (FVCI) through debt instruments in terms of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019. 5. Borrowing limit - (1) An eligible borrower may raise ECB up to the higher of (a) outstanding ECB up to USD 1 billion; or (b) total outstanding borrowing (external and domestic) up to 300 per cent of net worth as per the last audited standalone balance sheet of the borrower. Explanation: Outstanding borrowing shall not include non-fund based credit and funds raised through issuance of securities which are mandatorily convertible to equity. (2) The proposed ECB (other than ECB for refin....
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.... arm's length basis. 10. Receipt of ECB proceeds - (1) An eligible borrower shall drawdown ECB only after obtaining the Loan Registration Number (LRN) from Reserve Bank through the designated AD Category I bank. (2) ECB proceeds meant to be utilized for a permitted INR expenditure in India, shall be credited to an INR account held in India with the designated AD Category I bank by the end of the succeeding month from the date of receipt. Pending utilisation, the funds may be invested in an unencumbered fixed deposit of tenor up to one year with the designated AD Category I bank. (3) ECB proceeds meant to be utilized for a permitted foreign currency expenditure may be credited to an FCY account held in India with the designated AD Category I bank or an FCY account held outside India, in terms of the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulation, 2015. Pending utilisation, the funds may be invested outside India in an unencumbered fixed deposit of tenor up to one year or an unencumbered debt instrument with original maturity up to one year. 11. Security - (1) ECBs may be secured b....
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....nt shall be subject to the following terms and conditions: (a) No additional costs payable to the lender for enabling such conversion; (b) Consent of the lender is in place; and (c) Consent of other lenders, if any, is available or at least information regarding conversions is exchanged with other lenders. (3) The prudential regulations, including those on restructuring, shall also be applicable if borrower has availed credit facilities from an entity (including its foreign branch or subsidiary) regulated by the Reserve Bank. (4) ECB liability eligible for conversion into non-debt instruments shall be determined basis the exchange rate prevailing on the date of the agreement for such conversion between the parties concerned or at an exchange rate which does not result in a liability higher than that arrived at by using the exchange rate prevailing on the date of such agreement. 14. Change of parameters, terms and conditions - (1) Changes to the parameters, terms and conditions governing the ECB may be made, subject to lender's consent and compliance with the provisions of this Schedule. (2) In case of extension....
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.... AD Category I bank shall provide complete details of the borrowing to the agencies concerned. (5) The designated AD Category I banks may approach the Reserve Bank for cancellation of an allotted LRN at the request of the borrower, subject to the condition that no draw down has taken place. (6) Any borrower with an active LRN shall be treated as an untraceable borrower - (a) in case such borrower fails to submit any of the specified return(s) for four consecutive quarters or more after the quarter in which a drawdown or debt servicing was scheduled to be made as per the last reported 'Form ECB 1'; and (b) the designated AD category I bank, after completion of such period of four quarters, is satisfied that: (i) neither the borrower nor its auditor(s)/director(s)/ promoter(s) were reachable or responsive despite multiple attempts of communication undertaken and documented by the bank; and (ii) borrower was not found to be operative at the registered office address as per the records available with the bank. (7) In case a borrower qualifies as untraceable after occurrence of a drawdown, the designated AD Category I banks ....