RBI Withdraws Seven ECB/MTSS Circulars – A.P. (DIR) No 21 Explained
The RBI has withdrawn seven outdated ECB and MTSS circulars via A.P. (DIR) Circular No 21. Learn how this affects your foreign borrowing, masala bond issuances, and money‑transfer service compliance, and what the current regulatory framework is.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Foreign Exchange Management Act, 1999 – Sections 10(4) & 11(1) — Effective: ongoing. Source: https://rbi.org.in/Scripts/NotificationUser.aspx?Id=13&Mode=0&APDIRNO=21&Year=2026. Last reviewed by CA Harun Raaj: October 2026
RBI Withdraws Seven ECB/MTSS Circulars – A.P. (DIR) Circular No 21 Explained
What This Circular Does
A.P. (DIR Series) Circular No 21 (RBI/2026‑27/254), dated 8 September 2026, formally withdraws seven circulars issued between 2012 and 2015 under FEMA. The RBI’s objective is to rationalise the regulatory framework by removing circulars that have become redundant, overlapped, or superseded by later amendments. The circular is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and authorises authorised persons to circulate its contents to their constituents.
The Seven Withdrawn Circulars
The Current ECB Framework
Earlier in 2026, the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 (effective 16 February 2026) amended the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. These amendments superseded the ECB provisions of the Master Direction dated 26 March 2019. Consequently, the reference point for all ECB matters is now the 2018 Regulations as amended in 2026, together with any RBI directions issued thereunder. The seven withdrawn circulars no longer form part of the operative framework.
Who Is Affected
- Companies with existing or planned ECBs – Update compliance manuals, legal opinions, and loan agreements that still cite any of the withdrawn circulars. This is especially relevant for infrastructure borrowers, issuers of rupee‑denominated overseas bonds (masala bonds), and entities borrowing for import of services or technical know‑how.
- MTSS agents and sub‑agents – Circular No 49 (2012) on sub‑agent lists is withdrawn. All current requirements are now found in the MTSS Master Direction.
- Authorised Persons (banks and ADs) – RBI has instructed them to inform their constituents about the withdrawal.
Applicability and Reporting Obligations
- ECB reporting continues unchanged under the current ECB framework through the authorised dealer bank. The withdrawal does not introduce new reporting forms.
- Existing ECB transactions remain valid; the withdrawn circulars can still be used to demonstrate compliance for transactions that were completed under the rules in force at that time. However, any new drawdown, refinancing, or amendment must be assessed against the 2018 Regulations (as amended) and the latest RBI directions.
Penalties for Non‑Compliance
Contraventions of FEMA can be compounded under the Foreign Exchange (Compounding Proceedings) Rules, 2024 and the FED Master Direction No 04/2025‑26. A recent compounding order (September 2024) in the Master Talent Eduservices case imposed a penalty of ₹1.77 lakh for delayed filing of the Advance Remittance Form, FC‑GPR and FLA return. Timely compliance with the current framework avoids such compounded penalties and the associated administrative burden.
Key point: RBI has withdrawn seven outdated ECB/MTSS circulars, so all future compliance must follow the 2018 Regulations (as amended in 2026) and the latest Master Directions.
I'm CA Harun Raaj, Visakhapatnam. If you are affected, reach out to us for tailored assistance.
---
See Also
Frequently Asked Questions
Does the withdrawal of the seven circulars affect existing ECB agreements?
No. Existing ECB agreements remain valid, but any internal references to the withdrawn circulars should be updated, and any new drawdown, refinancing or amendment must be evaluated against the current ECB framework under the 2018 Regulations (as amended in 2026). (FEMA Sections 10(4) & 11(1) – A.P. (DIR) Circular No 21).
Where can I find the current ECB regulatory framework after the withdrawal?
The operative framework is the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended by the First Amendment Regulations, 2026 (effective 16 Feb 2026), read with any RBI directions issued under them. The 2019 Master Direction has been superseded. (A.P. (DIR) Circular No 21).
Which circulars were withdrawn and what topics did they cover?
Seven circulars were withdrawn: 1) ECB – Rupee‑denominated bonds overseas (Circular 17, 29 Sep 2015); 2) ECB in Indian Rupees (Circular 25, 3 Sep 2014); 3) ECB – Infrastructure sector definition (Circular 85, 6 Jan 2014); 4) Investment by non‑residents in tax‑free bonds (Circular 81, 24 Dec 2013); 5) ECB – Import of services/technical know‑how (Circular 119, 26 Jun 2013); 6) MTSS – Sub‑agents list (Circular 49, 7 Nov 2012); 7) ECB by SIDBI (Circular 48, 6 Nov 2012). (A.P. (DIR) Circular No 21).
What should MTSS sub‑agents do now that circular No 49 (2012) is withdrawn?
Sub‑agents must refer to the current MTSS Master Direction for the applicable requirements, as the earlier circular on sub‑agent lists is no longer operative. (A.P. (DIR) Circular No 21).
What are the penalties for failing to comply with current ECB reporting after the withdrawal?
FEMA contraventions can be compounded under the Foreign Exchange (Compounding Proceedings) Rules, 2024 and the FED Master Direction No 04/2025‑26. A recent case resulted in a compounded penalty of ₹1.77 lakh for delayed filing of required forms. (A.P. (DIR) Circular No 21).
Do authorised persons need to inform their clients about this withdrawal?
Yes. RBI has instructed authorised persons (banks and ADs) to bring the circular to the notice of their constituents, ensuring that clients are aware of the change. (A.P. (DIR) Circular No 21).
How does the 2026 First Amendment Regulations affect ECB borrowing?
The First Amendment Regulations, 2026 amended the 2018 Borrowing and Lending Regulations and superseded the 2019 Master Direction, making the amended 2018 Regulations the definitive reference for all ECB borrowing, lending and related reporting. (A.P. (DIR) Circular No 21).
Related Services
Based on this article's category and vertical tag, these services are the most relevant next steps.
Go deeper with our hub guides
Statute-cited, section-by-section guides covering the same ground this article does.
Need help with this?
Our team handles the paperwork. You focus on your business.