The Reserve Bank of India (RBI) by its notification dated 6 November, 2012, has included Small Industries Development Bank of India (SIDBI) as an eligible borrower for the purposes of availing foreign currency borrowings under the external commercial borrowings (ECB) policy. SIDBI is permitted to avail ECBs for on-lending to the micro small and medium enterprises sector (MSME Sector), as defined under the Micro, Small and Medium Enterprises Development Act, 2006. The final end-use must be in accordance with the permissible end-uses provided under the ECB policy.
The RBI has also specified that ECBs up to 50% of SIDBI's owned funds may be availed under the 'automatic route'. Borrowings beyond 50% of SIDBI's owned funds would be under the 'approval route'. Both automatic route and approval route borrowings will be subject to an overall cap of USD 500 million in a financial year.