RBI bars Indian residents to act as debtors for foreign guarantee under FEMA
This story was originally published at 09:53 IST on 12 January 2026
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NEW DELHI – The Reserve Bank of India has rolled out the Foreign Exchange Management (Guarantees) Regulations, 2026, aimed at tweaking norms of guarantees involving residents and non-residents under the Foreign Exchange Management Act, 1999. In a notification dated Jan. 6, the central bank said all persons who are residents of India will not be allowed to be parties to guarantees involving non-residents except as permitted, like guarantees by overseas or IFSC branches of authorised dealer banks, certain irrevocable payment commitments, and guarantees issued under overseas investment regulations.
According to the norms, which take effect from the day of being published, Indian residents may act as surety or principal debtor subject to conditions, which include checking whether the underlying transaction is permitted, and whether borrowing and lending eligibility norms are met, with defined exceptions. Residents may also obtain guarantees as creditors, subject to safeguards where both debtor and surety are non-residents, the RBI said.
The new regulations introduce detailed quarterly reporting obligations through a prescribed form and assign reporting responsibility based on party roles. Reporting by the debtor, or surety, or creditor will have to be made to an authorised dealer bank on a quarterly basis within 15 calendar days from the end of the respective quarter, the RBI said. An authorised dealer bank will then submit the returns received to the central bank within 30 calendar days from the end of the respective quarter.
The RBI also announced a structured late submission fee for delayed reporting, reinforcing compliance and regulatory oversight. End
Reported by Priyasmita Dutta
Edited by Tanima Banerjee
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