What Is an External Commercial Borrowing?
An External Commercial Borrowing (ECB) is a loan raised by an Indian entity from a recognised lender outside India – such as a foreign parent, bank or financial institution – under the RBI’s ECB framework.
Before drawing the loan, the borrower files Form ECB through its Authorised Dealer bank to obtain a Loan Registration Number (LRN) from the RBI. After that, a monthly ECB-2 return is filed through the AD bank, and changes to the loan terms are reported as required.
ECB registered and reported on time
- Eligibility checked
- LRN obtained
- ECB-2 filed every month
Who Raises ECB?
- Indian subsidiaries borrowing from a foreign parent
- Companies borrowing from foreign banks
- Entities eligible to receive FDI
- Startups raising foreign debt within the rules
Benefits
Access to foreign funds
Often at competitive cost compared with local borrowing.
Group funding
Fund Indian operations from the foreign parent.
Avoid penalties
Timely LRN and ECB-2 avoid late fees.
Clean records
Repayment and interest remittances go through smoothly.
Documents Required
- Loan agreement with the foreign lender
- Board resolution of the borrower
- Details of the lender and its relationship
- End-use of funds and repayment schedule
- Certificates and declarations required by the AD bank
ECB Process
Eligibility
We check borrower, lender, end-use and cost limits.
Agreement
Loan terms aligned with the ECB framework.
Form ECB
Filed through the AD bank to obtain the LRN.
Drawdown
Funds drawn only after the LRN is allotted.
ECB-2
Monthly return filed through the AD bank.
Common Mistakes to Avoid
- Drawing before the LRN – The loan should be drawn only after the LRN is allotted.
- Missing ECB-2 returns – The monthly return is required until the loan is repaid.
- Ineligible end-use – Some uses of ECB funds are not allowed.
- Cost above the ceiling – Interest and charges must stay within the all-in-cost ceiling.
- Unreported changes – Changes in terms need AD bank approval and reporting.
Ongoing Compliance
Monthly ECB-2
Filed every month through the AD bank.
Interest and repayment
Remittances with Form 15CA/15CB and TDS.
FLA return
Report the borrowing to the RBI by 15 July.
Closure
Report full repayment to close the LRN.
Why Choose Vaidam Consultancy for ECB Filing
FEMA experts
We handle RBI FIRMS filings and the supporting documents.
Clear quote upfront
You receive our fee and all charges before we begin.
On-time reporting
Filed within the RBI time limit to avoid late submission fees.
Bank coordination
We work with your AD bank until the form is approved.
Frequently Asked Questions
A Loan Registration Number allotted by the RBI after Form ECB is filed through your AD bank.
Every month, through the AD bank, until the loan is fully repaid.
Recognised lenders outside India, such as foreign parents, banks and financial institutions, as per the framework.
Yes, an all-in-cost ceiling applies as per the current RBI framework.
Yes, interest paid to a foreign lender is subject to TDS, and remittances need Form 15CA/15CB.