TITLE: Reserve Bank of India Updates Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations
BODY:
On February 16, 2026, the Reserve Bank of India (RBI) updated its Master Direction on External Commercial Borrowings (ECB), Trade Credits (TC) and Structured Obligations. This update supersedes the previous Master Direction dated November 22, 2018, and consolidates provisions governing foreign exchange transactions under the Foreign Exchange Management Act (FEMA), 1999.
The updated Master Direction applies to all Authorised Dealer Category-I banks and authorised banks conducting ECB and TC transactions. Key updates include revised frameworks for trade credit transactions, with FCY-denominated and INR-denominated trade credits available for imports of capital and non-capital goods. For FCY-denominated trade credits, the all-in-cost ceiling has been adjusted to benchmark rate plus 350 basis points for existing trade credits linked to LIBOR transitioning to alternative reference rates, and benchmark rate plus 300 basis points for new trade credits. For INR-denominated trade credits, the ceiling is benchmark rate plus 250 basis points.
The Master Direction incorporates provisions from the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, and the newly notified Foreign Exchange Management (Guarantees) Regulations, 2026, effective January 6, 2026. The update includes detailed frameworks for trade credits in Special Economic Zones (SEZ), Free Trade and Warehousing Zones (FTWZ), and Domestic Tariff Areas (DTA), along with security provisions and reporting requirements.
Authorised Dealer Category-I banks must furnish consolidated monthly trade credit transaction details to the RBI's Department of Economic Policy and Research by the 10th of the following month. The Master Direction has been issued under sections 10(4) and 11(1) of FEMA, 1999, and the RBI may issue further directions through A.P. (DIR Series) Circulars as necessary.
**Reference:** Reserve Bank of India Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations (Updated February 16, 2026)