The Reserve Bank of India (RBI) will now allow startups to raise External Commercial Borrowings (ECB) of up to $3 million in a financial year, RBI Governor Urjit Patel said. The central bank said that startups can raise ECB in Indian rupees, or in any other convertible currency or a combination of both. RBI will be issuing further guidelines in this regard by the end of this month.
ECB is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (public sector undertakings). It is for the first that startups will be allowed to access overseas money via ECB. The benefit for firms is that debt raised in domestic market can be repaid using ECB, as the interest rate for ECBs is much lower.