Net ECB Inflows Rise To $4.6 Billion In Apr-Jun , Shows RBI Data

Reserve Bank of India (RBI) data for Q1 FY26 (April–June 2025) reveals a noteworthy jump in net External Commercial Borrowings (ECBs), from $2.8 billion a year ago to $4.6 billion. This surge raises key questions: What is driving this inflow? How are borrowing patterns evolving across sectors? And what does this signify for India’s external financing mix and corporate leverage?

In this article, we dissect the RBI’s latest findings, compare them with broader capital flow trends, provide sectoral insights, and assess expert perspectives on risks and policy considerations.

Q1 FY26 ECB Snapshot: A Mixed Flow Picture

RBI’s monthly bulletin shows that net ECB inflows surged to $4.6 billion in Q1 FY26, up from $2.8 billion in Q1 FY25. Interestingly, ECB registrations moderated to $9.1 billion, down from $11.1 billion in the same quarter last year, pointing to stronger inflows relative to outflows despite slower uptake.

On a monthly breakdown: June inflows dipped sharply to $0.2 billion, compared to $1.2 billion in May; ECB registration counts also varied, 113 filings in June worth $3.5 billion, versus 100 in May totalling $2.73 billion and 125 a year ago worth $2.81 billion.

Sectoral Patterns and Pricing Trends

Borrowing intent shows divergent trends across sectors:

• Manufacturing saw growth: ECB registrations rose to $954 million in June 2025, from $603 million a year earlier.
   
• Infrastructure lead: filings more than doubled, reaching $1.81 billion versus $808 million in June 2024.
   
• Services sector moderated: fell to $19 million, down from $37 million.
   
• NBFCs pulled back: registrations dropped to $682 million from $1.31 billion.
   

In terms of cost:
 

• Floating-rate ECBs: Weighted average margin increased to 1.70% in June (from 1.46% in May and 1.36% a year ago).
   
• Fixed-rate ECBs: Offered between 0–10.50%, slightly improved from 0–11.00% seen in June 2024.
   

Q1 FY26 vs. Q1 FY25 ECB Overview

Table Overview: Net inflows grew significantly despite subdued registration volumes, suggesting lower outflow pressure. Manufacturing and infrastructure sectors emerged dominant in borrowing intent, aligning with capex revival. June’s dip, however, hints at cautious sentiment.

Capital Flows in Context: ECBs Amid Changing External Financing

While Q1 ECB inflows improved, broader capital flows tell a mixed story. India's current account shifted to a deficit of $2.4 billion (0.2% of GDP) in Q1, driven by trade gap expansion, even as services exports and remittances remained supportive. FPI flows slowed and corporate forex risk rose due to reduced hedging cover and rupee volatility.

Thus, while ECBs helped buffer the balance of payments, underlying fragilities in trade and portfolio inflows add pressure on external financing.

External Flow Comparison (Q1 FY26)