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Informist, Wednesday, Oct. 1, 2025

MUMBAI – Authorised dealer banks in India and their overseas branches may be permitted to lend in rupees to persons residing in Bhutan, Nepal, and Sri Lanka, Reserve Bank of India Governor Sanjay Malhotra said while detailing the outcome of the Monetary Policy Committee meeting on Wednesday. "...it is essential that INR liquidity is made available and accessible to residents of other countries," the RBI said. 

The amendment to the Foreign Exchange Management Act also includes any bank in these jurisdictions, to facilitate cross-border trade transactions. The amendments will be notified shortly, the RBI said. 

In a unanimous decision on Wednesday, the RBI's Monetary Policy Committee left the policy repo rate unchanged at 5.50%, the central bank's Governor Sanjay Malhotra said. The committee also retained its 'neutral' policy stance. Malhotra noted that the decision was a fallout of the inflation outlook turning out to be more benign than previously projected. 

The RBI also proposed to include select currencies of India's major trading partners in the list of reference rates published by Financial Benchmarks India Ltd. At present, Financial Benchmarks India publishes reference rates for US dollar, euro, sterling pound, and Japanese yen against the rupee. These rates are widely used for settlement of forex transactions, including derivatives. "This is expected to further deepen the onshore forex market and encourage banks to quote directly in a larger set of currency pairs, thus eliminating the need for multiple currency conversions and making trade more efficient," the RBI said. 

In order to expand investment opportunities in India for special rupee vostro account holders, the RBI has now decided to permit balances of these accounts to be invested in corporate bonds and commercial papers. The revised regulations will be notified shortly, the RBI said.  End

Reported by Kabir Sharma

Edited by Avishek Dutta

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