RBI Eases Cross-Border Trade Rules for Bhutan, Nepal, and Sri Lanka
The Reserve Bank of India (RBI) has amended foreign exchange regulations to simplify external trade and payments, introducing key relaxations for cross-border transactions.
Key Takeaways
- AD banks can now lend in Indian Rupees to entities in Bhutan, Nepal, and Sri Lanka
- Exporters get extended repatriation period for foreign currency accounts
- Changes apply to accounts in IFSC banking units
Rupee Lending for Neighbouring Countries
Authorised Dealer (AD) banks in India and their overseas branches are now permitted to lend in Indian Rupees to individuals, institutions, and banks in Bhutan, Nepal, and Sri Lanka. This move aims to facilitate smoother cross-border trade transactions with these neighbouring countries.
Extended Repatriation Timeline for Exporters
In a significant relief for exporters, the RBI has extended the repatriation period for unutilised balances in foreign currency accounts. While earlier requiring repatriation by the end of the month following realisation, exporters can now retain funds for up to three months when maintaining accounts with banks in the International Financial Services Centre (IFSC) in India.
The central bank had initially permitted Indian exporters to open foreign currency accounts with banks outside India for realising export proceeds in January 2025.
Regulatory Framework Updated
“The instructions contained in the Master Direction – Export of Goods and Services and Master Direction – Deposits and Accounts to effect these changes have also been amended accordingly,” the RBI release stated.
These amendments form part of the RBI’s continuous efforts toward ‘facilitating external trade and payments,’ with changes made to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 and Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015.
The central bank had previously issued a statement on Developmental and Regulatory Policies on October 1 this year, indicating its ongoing review of external sector regulations.
