RBI Implements Changes to FEMA to Support Cross-Border Trade in INR.

Banking & Finance

On January 16, 2025, the Reserve Bank of India (RBI) introduced new measures under the Foreign Exchange Management Act (FEMA) 1999 to encourage the use of the Indian Rupee (INR) and other local currencies in international trade.


      - These changes follow a detailed review of FEMA regulations in collaboration with the Government of India (GoI). This move comes at a time when the Indian currency is facing depreciation.

      - Overseas branches of Indian banks can now open INR accounts for individuals and businesses outside India, allowing current and capital account transactions with Indian residents.

      - Non-residents can settle legitimate transactions with other non-residents using balances in their repatriable INR accounts, such as Special Non-Resident Rupee Accounts (SNRR) and Special Rupee Vostro Accounts (SRVA).

Main Point :-   (i) Balances in repatriable INR accounts can now be used for investments like Foreign Direct Investment (FDI) in non-debt instruments.

      (ii) Indian exporters can open foreign currency accounts abroad for receiving export payments and making import payments, simplifying trade settlements.

(iii) To promote trade in local currencies, the RBI has signed MoUs with the central banks of the UAE, Indonesia, and the Maldives.

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