RAS question
ECB in the context of external borrowings stands for:
Correct answer: (C) External Commercial Borrowings.
In the Indian external borrowings context, ECB stands for External Commercial Borrowings.
Explanation
ECB means External Commercial Borrowings, a category of borrowing used by eligible Indian entities to access funds from lenders outside India. The RBI Master Circular places ECB under the Foreign Exchange Management Act framework and treats it as part of India’s external borrowing rules. It describes ECB as commercial loans from non-resident lenders, including forms such as bank loans, buyers’ credit, suppliers’ credit and securitised instruments. That is why, in an Indian economy question about external borrowings, ECB does not refer to a capital buffer, an export office, or a European monetary authority; it refers to the regulated route through which Indian borrowers raise commercial debt from abroad, in foreign currency or rupees as permitted by the framework.
Why the other options are wrong
- (A) Economic Capital Buffer is a capital adequacy phrase, not the RBI term used for commercial external borrowing by Indian entities.
- (B) Export Credit Bureau sounds related to trade finance, but the RBI external borrowing framework expands ECB as External Commercial Borrowings, not a bureau.
- (D) European Central Bank is a real institution, but in the Indian external borrowings context ECB refers to External Commercial Borrowings regulated under FEMA.
Concept
This tests the external sector vocabulary of the Indian Economy syllabus, especially capital flows and RBI-regulated borrowing routes. RAS repeats such abbreviations because they connect basic terminology with policy instruments used in balance-of-payments and financial-sector questions.