RBI Issues Foreign Exchange Management (Guarantees) Regulations, 2026 Replacing Foreign Exchange Management (Guarantees) Regulations, 2000

As part of its efforts to streamline the regulatory framework governing cross-border guarantees, the Reserve Bank of India (‘RBI’) has notified the Foreign Exchange Management (Guarantees) Regulations, 2026 (‘2026 Regulations’) on January 6, 2026, superseding the Foreign Exchange Management (Guarantees) Regulations, 2000 (‘2000 Regulations’). Some of the key changes that have been introduced pursuant to the 2026 Regulations are as follows:

1. Under the 2000 Regulations, any person resident in India being a party to a guarantee (in any capacity including as a principal debtor, surety or creditor) where any other party is a non–resident, was generally restricted unless it was either specifically exempted or it was approved by the RBI. However, as a shift in principle, the 2026 Regulations now allow a broader exemption to permit all transactions which are otherwise compliant with the Foreign Exchange Management Act, 1999 (‘FEMA’) and the rules, regulations and directions thereunder. The