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ARTICLE · 12 FEBRUARY 2025

FEMA Update | Amendments To FEMA Regulations Promoting Increased INR Usage

Mansukhlal Hiralal & Company
Mansukhlal Hiralal & Company
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The Reserve Bank of India (RBI), through a press release dated 16 January 2025, introduced amendments to several regulations made under the Foreign Exchange Management Act 1999 (FEMA).

IndiaFinance and Banking
Bhushan Shah
Bhushan Shah
Shreya Dalal
Shreya Dalal
Veena Hari
Veena Hari
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1. Background

The Reserve Bank of India (RBI), through a press release dated 16 January 2025, introduced amendments to several regulations made under the Foreign Exchange Management Act 1999 (FEMA). These amendments aim to enhance the use of the Indian Rupee (INR) in cross-border transactions. This initiative is a significant step towards reducing dependency on foreign currencies and increasing the global acceptability of INR for trade and investment purposes.

2. Amendments Brought In

The key changes introduced by the amendments include:

2.1. Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations 2019: Foreign investors can now use repatriable rupee accounts or foreign currency accounts for transactions, instead of earlier modes such as NRE, NRO, FCNR(B), or escrow accounts. This applies to transactions including the purchase/sale of equity instruments of Indian companies, investment/disinvestment in

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