The Reserve Bank of India (RBI) has announced key amendments to its foreign exchange regulations, effective from January 15, 2025. These changes aim to facilitate smoother business operations, simplify fund transfers, and provide greater flexibility for non-residents with business interests in India.
Key Amendments at a Glance
Authorised dealers in India and their branches abroad can now extend services, broadening their operational reach.
Transfer of funds between repatriable Rupee accounts is now permitted for all legitimate transactions.
Significant changes have been made to Special Non-Resident Rupee (SNRR) accounts:
- Non-residents with business interests in India can open SNRR accounts with authorised dealers in India or their overseas branches.
- Units in International Financial Services Centres (IFSCs) can open SNRR accounts with authorised dealers outside IFSCs for business-related transactions outside the IFSC.
- The tenure of SNRR accounts is now linked to the duration of the underlying contract, operational period, or business of the account holder, providing greater flexibility.
A minor technical change replaces “Indian bank” with “a bank” in Schedule 4.
Impact of the Amendments
These changes are expected to have several positive impacts:
- Increased Convenience for Businesses: Allowing authorized dealers and their foreign branches to provide services streamlines processes for businesses operating across borders.
- Simplified Fund Management: Permitting transfers between repatriable Rupee accounts simplifies fund management for individuals and businesses engaged in cross-border transactions.
- Greater Flexibility for Non-Residents: The changes to SNRR accounts offer greater flexibility for non-residents conducting business in India, facilitating easier access to financial services and simplifying fund management related to their Indian business activities.
- Enhanced IFSC Operations: The amendments related to IFSC units and SNRR accounts are expected to boost business activity within and outside of IFSCs.
