ECB Returns: AD Banks Get a 7-Day Filing Window
Why in the news
The RBI has set a hard time limit for authorised banks to pass on External Commercial Borrowing returns. The change is meant to make FEMA reporting cleaner, more reliable and more compliant.
Key facts
- Who is covered: AD Category-I banks, which must certify and send the complete ECB return to the RBI.
- Deadline: seven calendar days from the date the bank receives the return from the borrower.
- Effective date: 1 April 2026.
- Earlier position: banks had no fixed deadline for forwarding returns.
- LSF is payable only once the RBI has acknowledged receipt; the borrower is told how to pay by email.
- Banks are now directly answerable for making sure borrowers pay any penalty due for delays.
Forms and penalties
| Form | Purpose | Penalty treatment |
|---|---|---|
| Form ECB 1 | Applying for a Loan Registration Number before drawdown | Treated as a return that does not record fund flows; delay penalty is worked out on that basis |
| Form ECB 2 | Monthly return showing drawdowns and repayments | LSF per return; each delay under an LRN is a separate violation |
Background
- ECB: loans given to Indian residents by non-resident lenders, used to tap foreign capital that may be cheaper.
- AD Category-I banks: mostly commercial banks authorised by the RBI to handle foreign exchange, covering current and capital account dealings.
- Late Submission Fee: lets borrowers regularise delayed reporting by paying a fee instead of facing tougher FEMA adjudication.
Exam angle
- Time limit for banks: 7 calendar days; effective 1 April 2026.
- Form ECB 1 relates to the LRN; Form ECB 2 is the monthly fund-flow return.
- Related terms: FEMA, LSF, AD Category-I, Loan Registration Number.