Economics • Banking & FinanceMedium
What does 'External Commercial Borrowings (ECB)' refer to in India's macroeconomic framework?
A. Commercial loans raised by eligible resident entities from recognized non-resident lenders in foreign currency✓ Correct Answer
B. Loans provided by the International Monetary Fund to bridge balance of payment crises
C. Bonds issued by foreign governments in domestic Indian rupees
D. Inter-bank lending between domestic scheduled commercial banks and foreign bank branches in Mumbai
💡 Solution & Explanation
External Commercial Borrowings refer to commercial loans raised by eligible resident entities from foreign lenders in foreign currency, regulated under FEMA guidelines. Unlike IMF loans meant for balance of payment crises, ECBs are private or corporate commercial transactions. They help domestic firms access cheaper global capital markets.
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