Context:
As per the latest RBI data, External Commercial Borrowings (ECBs) registrations by Indian companies shot up about 84% in FY24 to $49.2 billion, against $26.7 billion in FY23.
External Commercial Borrowings (ECBs):
- Loans in India made by non-resident lenders in foreign currency to Indian borrowers.
- Used widely in India to facilitate access to foreign money by Indian corporations and PSUs (public sector undertakings).
- ECBs cannot be used for investment in the stock market or speculation in real estate.
- Regulated by – DEA (Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve Bank of India
- Part of – Capital Account in Balance of Payments.
Balance of Payments:
- Records the transactions in goods, services and assets between residents of a country with the rest of the world for a specified time period typically a year.
- 2 main accounts in the BoP — Current account and the capital account.
| Basis for Comparison | Current Account | Capital Account |
| Meaning | An account which records the export and import of merchandise and unilateral transfers done during the year by a nation are known as Current Account. | An account which records the trading of foreign assets and liabilities during the year by a country is known as Capital Account |
| Reflects | Net Income of the country. | Net change in ownership in national assets |
| Deals with | Receipt and disbursements of cash and non-capital items | Sources and application of capital |
| Components | Trade in goods and services, investment income, unrequited transfers | Foreign Direct Investment, Portfolio Investment, Government loans etc. |
Source: The Hindu BusinessLine
Previous Year Question
‘Global Financial Stability Report’ is prepared by the:
[UPSC Civil Service Exam – 2016 Prelims]
(a) European Central Bank
(b) International Monetary Fund
(c) International Bank for Reconstruction and Development
(d) Organisation for Economic Cooperation and Development
Answer: (b)
