Skip to main content

Amendments in / additions to forex guidelines

Reserve Bank of India (RBI) has amended various forex guidelines. This article lists out some of the such recent amendments.

What are the updates in the existing guidelines?

Previous guidelines Revised guidelines
Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills.
The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. 		Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills and non-convertible debentures / bonds and commercial papers issued by an Indian company.
The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account.
The balance in Special Rupee Vostro Accounts (SRVAs) can be used for –
  • Payments for projects and investments
  • Export / Import advance flow management
  • Investment in Government Treasury Bills, Government securities, etc.
 The balance in SRVAs can be used for –
  • Payments for projects and investments
  • Export / Import advance flow management
  • Investment in Government Treasury Bills, Government securities, etc.
  • Investment in non-convertible debentures / bonds and commercial papers issued by an Indian company
The entire Merchanting Trade Transactions (MTT) shall be completed within an overall period of 9 months and there shall not be any outlay of foreign exchange beyond 4 months.
The commencement date of merchanting trade shall be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date shall be the date of shipment / export leg receipt or import leg payment, whichever is the last. 		The entire MTT shall be completed within an overall period of 9 months and there shall not be any outlay of foreign exchange beyond 6 months.
The commencement date of merchanting trade shall be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date shall be the date of shipment / export leg receipt or import leg payment, whichever is the last.
A person resident in India, being an exporter, may open, hold and maintain a Foreign Currency Account with a bank outside India, for realisation of full export value and advance remittance received by the exporter towards export of goods or services.
Funds in this account may be utilised by the exporter for paying for its imports into India or repatriated into India within a period not exceeding the end of the next month from the date of receipt of the funds after adjusting for forward commitments, provided that the realisation and repatriation requirements as specified in the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 are also met. 		A person resident in India, being an exporter, may open, hold and maintain a Foreign Currency Account with a bank outside India, for realisation of full export value and advance remittance received by the exporter towards export of goods or services.
Funds in this account may be utilised by the exporter for paying for its imports into India or repatriated into India within a period not exceeding the end of –
  • 3 months in case of accounts maintained with banks in an International Financial Services Centre (IFSC)
  • next month for all other jurisdictions
from the date of receipt of the funds after adjusting for forward commitments, provided that the realisation and repatriation requirements as specified in the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 are also met.

What are the additions to the existing guidelines?

Relaxation in compliance requirements for Small Value Exporters / Importers

  • Notwithstanding anything contained in the Master Direction – Export of Goods & Services and Master Direction – Import of Goods & Services, Authorised Dealer (AD) banks shall adopt the following procedure while closing entries (including outstanding entries) in Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) of value equivalent to ₹10 lakh per entry / bill or less –
    • Such entries shall be reconciled and closed based on a declaration provided by the concerned exporter that the amount has been realised or by the importer that the amount has been paid.
    • Any reduction in declared value or invoice value of the shipping bills / bills of entry shall also be accepted, based on the declaration by the concerned exporter or importer.
    • The declarations may also be received on a quarterly basis from the exporters and importers in a consolidated manner (by combining several bills in one declaration) for bulk reconciliation and closing of EDPMS / IDPMS entries.
  • Accordingly, AD banks shall also review the charges levied for handling these small-value export and import transactions, keeping in view the revised procedure / relaxations mentioned above and ensure that the same are commensurate with the services rendered. 
  • AD banks shall not levy any penal charges (penalty) for delays in adherence to any regulatory guidelines.

Lending in Indian Rupees (INR) by AD banks to Persons Resident Outside India

  • AD banks in India and their overseas branches have been permitted to lend in INR to persons resident in Bhutan, Nepal, and Sri Lanka, including banks in these jurisdictions, to facilitate cross border trade transactions.

Additional Reference Rates to be published by Financial Benchmarks India Limited

  • At present, Financial Benchmarks India Limited (FBIL) publishes reference rates for USD, EUR, GBP and JPY against INR. It is now proposed to include select currencies of India’s major trading partners in the list of reference rates published by FBIL. This is expected to encourage banks to quote directly in a larger set of currency pairs, thus eliminating the need for multiple currency conversions and making trade more efficient. FBIL has been advised to publish the new reference rates in consultation with the market.


References

Reserve Bank of India. (2025, October 01). 'Directions to AD Banks - Measures to provide flexibility and ease compliance burden on Exporters, Importers and Merchanting Traders'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61341

Reserve Bank of India. (2025, October 01). 'Export Data Processing and Monitoring System (EDPMS) & Import Data Processing and Monitoring System (IDPMS) – reconciliation of export /import entries – Review of Guidelines'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12908&Mode=0

Reserve Bank of India. (2025, October 13). 'Facilitation of External Trade and Payments – Amendment to Regulations'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61419

Reserve Bank of India. (2025, October 06). 'Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2025'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12915&Mode=0

Reserve Bank of India. (2025, September 29). 'Foreign Exchange Management (Debt Instruments) (Fourth Amendment) Regulations, 2025'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12914&Mode=0

Reserve Bank of India. (2025, October 06). 'Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Seventh Amendment) Regulations, 2025'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12916&Mode=0

Reserve Bank of India. (2025, October 03). 'International Trade Settlement in Indian Rupees (INR)'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12910&Mode=0

Reserve Bank of India. (2025, October 03). 'Investment in Corporate Debt Securities by Persons Resident Outside India through Special Rupee Vostro account'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12909&Mode=0

Reserve Bank of India. (2025, October 01). 'Merchanting Trade Transactions (MTT) – Review of time period for outlay of foreign exchange'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12907&Mode=0

Reserve Bank of India. (2025, October 01). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61334


Follow at - Telegram   Instagram   LinkedIn   X   Facebook

Labels:

Comments

Post a Comment

Popular Posts

Highlights of RBI Annual Report 2025-26 – Chapter 1 to 3

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the first article in the series.  Legal framework for publication of Annual Report by the RBI Report of the Central Board of Directors on the working of RBI for the year is submitted to the Central Government in terms of Section 53(2) of the RBI Act, 1934. The letter of transmittal is signed by the RBI Governor and addressed to the Finance Secretary, Ministry of Finance, Government of India. Documents submitted by the RBI to the Central Government In pursuance of Section 53(2) of the RBI Act, 1934, the following documents have been submitted to the Central Government – A copy of the Annual Accounts for the year ended March 31, 2026 certified by the RBI’s Auditors and signed by Chief General Manager-in-charge, all the Deputy Governors and Governor. 2 copies of the Annual Report of the Central Board on the workin...
Post a Comment
Read more

Highlights of RBI Annual Report 2025-26 – Chapter 6 (Part I)

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the third article in the series.  Chapter 6 – Regulation, Supervision and Financial Stability (Part I) Opening of and operation in deposit accounts of minors by banks – Minors of any age can open and operate savings and term deposit accounts through his / her natural or legal guardian or with mother as guardian.  Minors above the age of 10 years may open and operate savings and term deposit accounts independently, if they so desire. Digital lending guidelines – Regulated Entities (REs) were mandated to ensure that lending service providers (LSPs) display all loan offers to borrowers when multiple lenders are involved.  A public directory of Digital Lending Apps (DLAs) was introduced to help borrowers verify their link with REs. Non-Banking Financial Companies (NBFCs) were allowed to consider Default...
Post a Comment
Read more

Trade Receivables Discounting System (TReDS)

Reserve Bank of India (RBI) has issued the directions on Trade Receivables Discounting System (TReDS). What is TReDS? TReDS is a technology platform on a digital or electronic network for facilitating factoring of trade receivables through multiple financiers. What is a Factoring Unit? Factoring unit refers to trade receivable in the form of invoice / bill uploaded either by the seller (in the case of factoring) or by the buyer (in case of reverse factoring), as the case may be. Who are the participants in TReDS? Seller – Micro, Small and Medium Enterprise (MSME) Buyer – any person liable to the seller, whether under a contract or otherwise, against an invoice or bill of exchange, to pay any trade receivable Financier – all entities / institutions permitted to undertake factoring business under the Factoring Regulation Act, 2011 Insurance companies  Credit Guarantee Fund Trust notified by the Government of India Who can operate TReDS platforms? An entity shall seek authorisation fr...
Post a Comment
Read more

Highlights of RBI Annual Report 2025-26 – Chapter 4 & 5

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the second article in the series.  Chapter 4 – Credit Delivery and Financial Inclusion The limit for collateral free loans to Micro and Small Enterprises (MSEs) was enhanced from ₹10 lakh to ₹20 lakh. The RBI was involved with the nationwide campaign, ‘Aapki Poonji, Aapka Adhikar’ (Your Money, Your Right), conducted during October-December 2025 to facilitate the return of unclaimed deposits and timely settlement of eligible claims from the Depositor Education and Awareness (DEA) Fund. During the campaign, ₹2,876 crore of unclaimed deposits were settled by public sector banks and regional rural banks. Expanding and Deepening of Digital Payments Ecosystem (EDDPE) programme  The programme aims to provide every eligible individual in the identified districts at least one mode of digital payment, viz., debit / ...
Post a Comment
Read more

Transfer of Surplus by the RBI to the Government

The surplus payable by the Reserve Bank of India (RBI) to the Central Government for the financial year 2025-26 amounted to ₹2,86,588.46 crore.  Why does the RBI transfer the surplus amount to the Central Government? As per section 47 of the RBI Act, 1934, after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and other provisions, the balance of the profits of the RBI is required to be paid to the Central Government. Also, the Central Government holds 100% of the share capital of the RBI. How much risk provision is required to be maintained by the RBI? The RBI developed the Economic Capital Framework (ECF) during 2014-15 and 2015-16 for determining the appropriate level of risk provisions to be made under the provisions of section 47 of the RBI Act, 1934.  In November 2018, the RBI, in consultation with the Government, constituted an Expert Committee to review the ECF of the RBI (Chairman: Dr. Bimal Jalan, fo...
Post a Comment
Read more