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

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 September 30, 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% 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.

This story has been published from a wire agency feed without modifications to the text.

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