Startups can now raise $3 million in external commercial borrowings (ECB) p.a.

The Reserve Bank of India (RBI) on Tuesday said it would allow start-ups to access foreign currency loans of up to $3 million a year under the external commercial borrowing (ECB) route, in a statement separate from the monetary policy review.

The statement issued by RBI said,

These measures are aimed at creating an enabling framework for receiving foreign venture capital, differing contractual structures embedded in investment instruments, deferring receipt of considerations for transfer of ownership, facilities for escrow arrangements and simplification of documentation and reporting procedures.

Start-ups can raise up to $3 million either in rupees or in any convertible foreign currency or a combination of both, said the statement.

In February, RBI allowed start-ups to raise rupee loans through the ECB route.