Liberalization of FEMA Regulations for encouraging settlement of cross-border transactions in Indian Rupee (INR)

Reserve Bank of India (RBI), in consultation with the Central Government, amended the following regulations with a view to promote the usage of INR for settling cross-border transactions:

Foreign Exchange Management (Deposit) (Fifth Amendment) Regulations, 2025

A person resident outside India (PROI), having a business interest in India can now open and maintain a Special Non-Resident Rupee Account (SNRR) with an Authorized Dealer (AD) Bank in India or its overseas branches. 

The scope of permissible transactions through an SNRR account has been expanded to encompass both current and capital account transactions with residents in India, as well as transactions with PROI.

The previous limit of seven years for holding an SNRR account has been lifted, aligning the same with the duration of the contract or the business operations of the account holder.

Source: Notification No. FEMA 5(R)(5)/2025-RB dated 14 January 2025

Foreign Exchange Management (Mode of Payment and Reporting of Non- Debt Instruments) (Third Amendment) Regulations, 2025

PROIs have been permitted to use balances held in repatriable foreign currency or Rupee account for foreign investment with the sale proceeds also being creditable to such accounts. 

Furthermore, the regulations governing the issuance of Convertible Notes by Indian start-up enterprises have been updated to correspond with the aforementioned changes, ensuring inward remittance or debit to repatriable accounts for the consideration, with similar provisions for repayment or sale proceeds.

Source: Notification No. FEMA 395(3)/2025-RB dated 14 January 2025

Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Fifth Amendment) Regulations, 2025

Exporters are now permitted to open and maintain foreign currency accounts with banks outside India under general permissibility. These accounts are intended for collecting proceeds from exports and for making advance payments for exports. The funds in these accounts can be utilized for import payments or must be repatriated to India within the prescribed period, adhering to the requirements for realization and repatriation.

Source: Notification No. FEMA 10(R)(5)/2025-RB dated 14 January 2025