RBI eases FEMA norms to promote cross-border deals in rupee, local units
This story was originally published at 18:09 IST on 16 January 2025
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--RBI eases FEMA norms to promote cross-border deals in rupee, local units
MUMBAI – The Reserve Bank of India has liberalised the Foreign Exchange Management Act rules to promote the use of rupees and other national currencies for cross-border settlements, the central bank Thursday said in a press release. This follows three amendments to various sections of the Foreign Exchange Management Regulations, 2019, notified earlier in the day.
The central bank has allowed any bank to open special non-resident rupee accounts, which were earlier restricted to only Indian banks, and has also enabled units in the International Financial Services Centre to create such accounts with non-IFSC authorised dealers in India.
It has also allowed any non-resident to carry out transactions with other non-residents using the balances in special non-resident rupee account or special rupee vostro accounts. Non-residents can even utilise the balances in these accounts for foreign investments. Apart from this, the amendment permits exporters to open accounts in any foreign currency overseas for settlement of trade transactions.
The regulator said the review of the Foreign Exchange Management Act as part of an ongoing initiative to promote the Indian currency for cross-border payments. The RBI has signed pacts with various other nations, including United Arab Emirates, Indonesia and the Maldives, to conduct transactions in local currencies. The central bank also introduced an arrangement in the form of a special rupee vostro account which enabled several foreign banks to open vostro accounts with Indian banks. End
Reported by Christina Titus
Edited by Akul Nishant Akhoury
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