India Inc’s funding via the external commercial borrowing (ECB) route at about $41 billion in FY26 was 33 per cent lower compared to $61 billion in FY25 as companies stepped up borrowing from domestic Banks amid softer interest rates and a depreciating currency.

In fact, in FY26, March saw the highest borrowing of $5.43 billion by Indian companies via ECB. However, this was much lower than the March 2025 ECB mop up of a whopping $11.04 billion, per RBI data.

The moderation in ECB reflects both favourable domestic interest rates following monetary policy easing and higher hedging costs making ECB loans costly, according to the central bank.

ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities. These borrowings have conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc.

In current easing cycle (February 2025 to February 2026), the RBI’s monetary policy committee cumulatively cut the repo rate by 125 basis points (bps) from 6.50 per cent to 5.25 per cent, the weighted average lending rate (WALR) of Scheduled Commercial Banks on fresh and outstanding rupee loans declined by 89 bps and 87 bps, respectively.

The rupee weakened about 10 per cent in FY26, depreciating more than the average in the previous years.

Madan Sabnavis, Chief Economist, Bank of Baroda, said: ‘We have seen that bank credit growth was very good at about 16 per cent. So, the choice is really between domestic borrowing and overseas borrowing.

“So, when domestic borrowing was open...even NBFC’s, who are major borrowers via ECB’s, came back to the banking system.”

According to bankers’ borrowing from Indian banks was at least 100 basis points cheaper for Indian companies as compared to ECBs in FY27.

In the reporting month, the companies that raised $100 million plus funds via ECBs include Rajasthan Part I Transmission Ltd ($750 million), IIFL Finance ($700 million), Adani Transmission Step-One ($500 million), Bajaj Finance and Sammaan Capital ($400 million each), Indian Railway Finance Corporation (391.58 million), REC ($250 million), Interglobe Aviation ($212 million) Aditya Birla Capital ($200 million), Nuclear Power Corporation of India ($198.51 million), and National Bank for Financing Infrastructure and Development ($125 million).

Published on May 14, 2026