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The Reserve Bank of India (RBI) has introduced several new amendments to regulations on financial accounts held by Indians overseas, in an effort to encourage greater use of the rupee (INR) in cross-border transactions.
Last week, the RBI published three amendments to India’s Foreign Exchange Management (FEMA) Regulations that will make it easier for non-residents to transact in INR.
Effective immediately, overseas branches of Authorised Dealer banks will be able to open INR accounts for non-residents, and these accounts may be used to make current account and capital account transactions with residents in India.
An Authorised Dealer bank, under the RBI’s licensing framework, is a financial institution that is permitted to deal in foreign exchange transactions.
Also under the new amendments, non-residents will be able to transact with other non-residents using funds held in any repatriable INR account.
These include the Special Non-Resident Rupee Account and the Special Rupee Vostro Account.
Additionally, non-residents will be able to use funds held in repatriable INR accounts for foreign investment purposes in non-debt instruments.
Finally, persons residing in India that export goods and services to other countries will be able to open accounts in any foreign currency overseas.
The amendments build on several RBI memoranda of understanding (MoU), signed in 2023 and 2024, with the central banks of the UAE, Indonesia and the Maldives on the use of local currencies in cross-border transactions.
