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ARTICLE · 26 AUGUST 2025

Regulatory Update: Foreign Exchange Management (Guarantees) Regulations, 2025

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The Reserve Bank of India ("RBI") has issued the draft Foreign Exchange Management (Guarantees) Regulations, 2025 ("Draft Regulations") on 14 August 2025 for public feedback.

IndiaFinance and Banking
Shreya Dalal
Shreya Dalal
Divyang Salvi
Divyang Salvi
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The Reserve Bank of India ("RBI") has issued the draft Foreign Exchange Management (Guarantees) Regulations, 2025 ("Draft Regulations") on 14 August 2025 for public feedback. Replacing the 2000 framework, the Draft Regulations shift from a transaction-specific approach to a principle-based regime, introducing mandatory reporting and extending compliance responsibilities for persons resident in India involved in cross-border guarantee arrangements. [Click here to view the draft issued by RBI.]

Introduction

The Draft Regulations, issued under Sections 6(2) and 47(2) of the Foreign Exchange Management Act, 1999 ("FEMA"), apply to guarantees between persons resident in India ("PRII") and persons resident outside India ("PROI"). Unlike the 2000 framework, which prescribed case-specific approvals, the Draft Regulations adopt a principle-based approach, permitting guarantees subject to FEMA compliance and introducing reporting obligations for the first time. By

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