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Sujai Adithya
Business Development and Banking & Financial Services Expert
Asked a question last year

What is External Commercial Borrowing?

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Sujai Adithya
Business Development and Banking & Financial Services Expert

Capital inflows are always a major part of the development policy. The government have been always promoting this capital inflows. Lack of domestic capital has forced the government historically to go after foreign capital. Foreign capital is money drawn from foreign countries to make investment domestically. There are different types of foreign capitals and the major category is Foreign Direct Investment (FDI). Similarly, other types of foreign capital are NRI deposits and the most important one is External Commercial Borrowing (ECB).

Lack of domestic capital has forced the government historically to go after foreign capital. Foreign capital is money drawn from foreign countries to make investment domestically. There are different types of foreign capitals and the major category is Foreign Direct Investment (FDI). Similarly, other types of foreign capital are NRI deposits and the most important one is External Commercial Borrowing (ECB).

The money which is used for the financing of commercial activities in our country through foreign sources is called External commercial borrowing. They can be any form namely loans, credits or even security instruments. They are not allowed to trade through any stock exchanges. The loan availed from foreign sources is of the minimum average maturity of 3 years.
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