RBI announces relaxations in foreign exchange management norms to ease payments for exporters and importers, extending repatriation periods and simplifying compliance.
Mumbai: The Reserve Bank of India (RBI) on Wednesday announced a series of relaxations in foreign exchange management norms aimed at easing payments for exporters and importers. The measures include an extension in the time frame for repatriation of export earnings, amid growing uncertainties in global trade.
The central bank has extended the repatriation period for foreign currency accounts maintained in India’s International Financial Services Centres (IFSCs) from one month to three months. The RBI said the move is expected to encourage exporters to open accounts with IFSC banking units and boost forex liquidity. Amendments to the regulations will be notified shortly.
In January 2025, the RBI allowed Indian exporters to open foreign currency accounts with banks outside India for the realisation of export proceeds. Funds in such accounts can be used for import payments or must be repatriated by the end of the following month from the date of receipt.
For merchanting trade transactions, the period for forex outlay has been extended from four months to six months. The RBI said this would help merchants navigate supply chain disruptions and other challenges caused by global trade uncertainties.
The central bank also eased compliance requirements for small-value exporters and importers. Under revised guidelines, the process of reconciliation in the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) will be simplified. Authorised dealer banks will now be able to reconcile and close bills valued at up to ₹10 lakh per bill based on a declaration by the exporter or importer confirming realisation. The change is expected to cut compliance burdens and improve the ease of doing business.
Separately, the RBI has proposed revisions to the framework governing External Commercial Borrowings (ECBs) under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. The draft framework includes expansion of eligible borrowers and recognised lenders, rationalisation of borrowing limits, removal of restrictions on the cost of borrowing, review of end-use conditions, and simplification of reporting requirements.
The RBI also announced plans to rationalise regulations governing the establishment of branches, liaison, project and other offices in India. The revised norms, which replace those issued in 2016, will be principle-driven, delegate more powers to authorised dealer banks, and reduce compliance burdens. Draft regulations will be released shortly, the central bank said.
IANS
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