RBI Eases Forex Rules to Facilitate Trade with Neighbouring Countries and Extend Export Proceeds Repatriation Window
SDG 8: Decent Work and Economic Growth | SDG 17: Partnerships for the Goals
Institutions: Reserve Bank of India | Ministry of Finance
The Reserve Bank of India (RBI) has announced two key regulatory amendments to further facilitate external trade and payments, building on commitments made in the Statement on Developmental and Regulatory Policies (1 October 2025). The measures are aimed at improving trade financing flexibility and settlement efficiency with India’s immediate neighbourhood.
Under the Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2025, Authorised Dealer (AD) banks in India and their overseas branches are now permitted to lend in Indian Rupees to persons resident in Bhutan, Nepal, and Sri Lanka, including local banks in these jurisdictions. This move is expected to deepen rupee-denominated cross-border trade and lower settlement risks, while promoting regional monetary cooperation.
Separately, through the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Seventh Amendment) Regulations, 2025, the RBI has extended the repatriation period for unutilised export proceeds held in foreign-currency accounts with banks in India’s International Financial Services Centre (IFSC) from one month to three months. The relaxation provides exporters greater liquidity and flexibility in managing offshore receipts.
The relevant Master Directions on Export of Goods and Services and Deposits and Accounts have been updated accordingly.
These amendments reinforce India’s strategy of using the rupee for regional trade, supporting exporters through time-bound procedural ease, and aligning foreign-exchange management with evolving global-trade frameworks.
What is FEMA (Amendment) Regulation 2025 about? → The Foreign Exchange Management (Amendment) Regulations 2025 modify RBI’s existing FEMA rules to widen permissible lending and account-management activities in foreign exchange. The current update enables rupee lending for trade with neighbouring countries and longer retention of export proceeds in IFSC-based foreign-currency accounts—streamlining external payments without compromising prudential oversight.
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