Schedule I explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Paragraphs 1 to 6 of Schedule I answer the first questions about any external commercial borrowing (ECB): who may borrow, from whom, in what currency, in what form, how much, and for how long. The Schedule was substituted with effect from February 16, 2026.
This is Schedule I (External Commercial Borrowing (ECB) Framework) of the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (Notification No. FEMA.3(R)/2018-RB, December 17, 2018), as per the text on the Reserve Bank's site, amended up to February 16, 2026. Any person resident in India other than an individual, incorporated, established or registered under a Central or State Act, may borrow if the applicable Act permits. The limit is the higher of outstanding ECB up to USD 1 billion or total outstanding borrowing up to 300 per cent of net worth. The minimum average maturity period is three years, with a manufacturing exception.
Authority and the Schedule's place
The Regulations rest on the Foreign Exchange Management Act, 1999. Their preamble cites "clauses (a), (d) and (e) of Sub-Section (3) of Section 6, sub-section (2) of Section 47". The Act text now prints section 6(3) as omitted, and section 47(3) keeps earlier Reserve Bank regulations in force until amended or rescinded. Read the Act articles on section 6 and sections 47 and 48.
Schedule I is headed "". It was substituted with effect from February 16, 2026 by Notification No. FEMA 3(R)(5)/2026-RB dated February 09, 2026, as the footnote on the page states, so only the new paragraphs are read here. For the filing side, see our ECB reporting service.
Paragraph 1: eligible borrowers
- Any person resident in India (other than an individual) incorporated, established or registered under a Central or State Act is an eligible borrower, subject to being permitted for ECB under the applicable Act(s).
- A borrower under a restructuring scheme or corporate insolvency resolution process may raise ECB only if specifically permitted under the restructuring or resolution plan.
- A borrower against whom an investigation, adjudication or appeal for contravention of any rule, regulation or direction under the Act is pending may still raise ECB, without prejudice to the outcome, but must disclose the pending matter under "Form ECB 1" (or "Revised Form ECB 1" where an ECB exists).
Paragraph 2: recognised lenders
An eligible borrower may raise ECB from (a) a person resident outside India; (b) a branch outside India of an entity whose lending business is regulated by the Reserve Bank; and (c) a financial institution, or a branch of one, set up in an IFSC. For (c), "financial institution" has the meaning in the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015.
Paragraphs 3 and 4: currency and forms
Paragraph 3 lets an eligible borrower raise ECB denominated in foreign currency or in Indian rupees. The currency may be changed from one foreign currency to another, foreign currency to rupees, and rupees to a foreign currency, at the exchange rate on the date of the agreement for the change or at a rate which does not produce a higher liability.
Paragraph 4 allows any form of commercial borrowing arrangement involving agreed interest, if any, and repayment of principal. ECB includes FCCBs and FCEBs. Funds received from a person resident outside India on or after April 30, 2007 against preference shares or debentures that are not fully and mandatorily convertible to equity are treated as ECB. The following are not ECB:
- trade credit with original maturity up to three years, raised under these Regulations;
- export advance received under these Regulations and the Export of Goods & Services Regulations, 2015 as named in the paragraph;
- investments received under the Debt Instruments Regulations, 2019;
- investments through convertible notes under the Non-Debt Instrument Rules, 2019; and
- FVCI investments through debt instruments under the same Rules.
The Non-Debt Instruments Rules, 2019 are not in the sources consulted for this series; read them from the official site.
Paragraph 5: borrowing limit
| Point | Paragraph 5 as printed |
|---|---|
| Limit | 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 |
| What counts | Outstanding borrowing excludes non-fund based credit and funds raised through securities that are mandatorily convertible to equity |
| Proposed ECB | The proposed ECB, other than for refinancing, is counted when checking compliance |
| Regulated borrowers | The limit does not apply to borrowers regulated by financial sector regulators |
"Net worth" for companies has the meaning in the Companies Act, 2013; for other entities regulation 2(1)(y)(ii) defines it as the sum of funds recorded in the balance sheet under capital and undistributed profits, after deducting accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the last audited balance sheet.
Paragraph 6: minimum average maturity
- Sub-paragraph (1): a minimum average maturity period (MAMP) of three years. The Explanation says average maturity is computed as illustrated in Annex I.
- Sub-paragraph (2): a borrower in the manufacturing sector may raise ECB with average maturity between one year and three years, provided the outstanding amount of such ECBs does not exceed USD 150 million.
- Sub-paragraph (3): call and put options cannot be exercised before the MAMP is complete.
- Sub-paragraph (4): MAMP need not be met on conversion to non-debt instruments, repayment from proceeds of non-debt instruments issued on a repatriation basis (received after drawdown), refinance under the Regulations, waiver of debt by the lender, or repayment needed for corporate actions such as closure, merger, demerger, arrangement, acquisition of control, amalgamation, resolution or liquidation by the lender or borrower.
Annex I: the average maturity illustration
Annex I assumes an ECB of USD 2 million drawn in three instalments and repaid in eight half-yearly instalments. For each date it multiplies the balance by the number of days the balance stays with the borrower (computed on a 360-day basis using the DAYS360 function) and divides by the loan amount times 360. The sum of the products in column 6 is the average maturity period; the illustration arrives at 3.2851. Use it as the method the Regulations print, and compute your own schedule with your own dates.
Example
Orion Textile Mills Limited, an invented manufacturing company, wants a three-year foreign currency term loan. It is not under a resolution plan and has no matter pending. Its paragraph 5 limit is the higher of USD 1 billion of outstanding ECB or 300 per cent of net worth for total borrowing, and the new loan counts against it. With a repayment schedule giving a MAMP of three years, paragraph 6(1) is met. If it wanted a two-year average maturity, sub-paragraph (2) would apply and the total of such ECBs outstanding could not exceed USD 150 million. The lender must fall within paragraph 2, and the loan must not be put to an end-use barred by the end-use list in regulation 3A.
Cost, proceeds, security and refinancing are in paragraphs 7 to 12, covered in our next article. Amendments and circulars after February 16, 2026 should be checked.
Need help with an ECB?
Choosing the lender, checking the limit and aligning the maturity schedule should be settled before the agreement is signed. Our ECB reporting team can review the term sheet against Schedule I and prepare the reporting that follows.
Key takeaways
- Eligible borrowers are persons resident in India, other than individuals, incorporated or registered under a Central or State Act and permitted for ECB under that Act.
- A pending investigation does not stop an ECB, but it must be disclosed in Form ECB 1 or Revised Form ECB 1.
- Recognised lenders are non-residents, overseas branches of regulated lenders, and IFSC financial institutions.
- Limit: the higher of USD 1 billion outstanding ECB or 300 per cent of net worth for total outstanding borrowing; regulated entities are outside the limit.
- MAMP is three years, with a manufacturing route of one to three years up to USD 150 million.
Read next
- ECB cost, proceeds, security and refinancing: Schedule I paragraphs 7 to 12
- ECB conversion, change of terms and reporting: paragraphs 13 to 16
- Borrowing in foreign exchange: regulation 4
- ECB eligible borrowers and lenders
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.