Discussion
What does E stands for in ECB?
Answer: B
Correct answer: External
ECB is External Commercial Borrowing: a commercial loan raised by an eligible Indian entity from a recognised non-resident lender.
The word external marks the source of the funds as outside India, which is why the RBI regulates them - through limits on amount, minimum average maturity, permitted end-uses and an all-in-cost ceiling. The concern is currency risk and external debt: borrowing in foreign currency is cheap until the rupee moves. The same letters mean European Central Bank in another context entirely.
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