Mumbai, Oct. 29 -- Sweeping relaxations by the Reserve Bank of India (RBI) on rules for Indian companies to borrow overseas may not trigger an immediate surge in such loans, as cheaper local loans and high hedging expenses dull the appeal of external commercial borrowings (ECBs). The central bank earlier this month raised the amount corporates can borrow, scrapped cost caps on ECB rates, and eased restrictions on how the funds can be used. The draft aims to simplify accessing the overseas market, proposing measures like higher per-tranche limits and greater currency flexibility, including the conversion of rupee bonds to foreign currency and vice versa. ECBs are foreign-currency or rupee-denominated loans raised from non-resident lenders. "I don't think borrowers were getting choked by the earlier limits. But the RBI likely eased caps to prevent any bottleneck if credit demand rises in the coming quarters," said a senior executive at a global investment bank. The regulatory moves come amid a broader 'wait-and-watch' stance across markets due to global rate uncertainty, he said, adding that if festive demand boosts credit growth, ECBs will avert funding stress in the fourth quarter, given that domestic liquidity has tightened. "No one's rushing in yet, but it's about timing, demand and pricing," he said, speaking on the condition of anonymity. Indian firms raised $12.44 billion through ECBs till July of this financial year, compared with $14.68 billion a year earlier, as per RBI data. Some of the largest ECBs during this period were raised by Reliance Industries, Oil India, Indian Renewable Energy Development Agency and Credit AccessGrameen. Non-bank lenders are among the biggest categories to borrow overseas. The central bank has been encouraging NBFCs to raise funds via overseas bonds to diversify their borrowing profile. However, ECBs by NBFCs are also seen muted in FY26 given the expectation of a pick-up in bank financing in the second half of the financial year, besides the higher hedging costs, said industry experts. "ECBs had done very well in FY25. Now, interest rates have largely gone down, and the rupee has depreciated 4-5% (this year) and so many corporates are now instead looking at domestic borrowings," said Jinay Gala, head of research for non-bank financial institutions at India Ratings. The rupee weakened by about 3.7% against the dollar in the first half of FY26 owing to a strong dollar, rising crude prices, foreign portfolio outflows, and US tariffs. On Tuesday, it was trading 21 paise lower at 88.40 against the US dollar....