Overview On The Non-Debt Instruments Rules, 2019 Read With The Non-Debt Instruments (Amendment) Rules, 2019

The Ministry of Finance, on October 15, 2019, notified Sections 139, 143 and 144 of the Finance Act, 2015 which had proposed certain amendments to Section 6 (Capital Account Transaction), Section 46 (Power of Central Government to make rules) and Section 47 (Power of RBI to make regulations) respectively, of the Foreign Exchange Management Act, 1999.

These amendments have, inter alia, resulted in a power shift from the RBI to the Central Government, enhancing the latter's involvement in the foreign exchange transactions. A bifurcation of instruments into debt instruments and non-debt instruments has been introduced and while the RBI (in consultation with the Central Government) is assigned the responsibility to draft regulations for debt instruments, the Central Government (in consultation with the RBI) is entrusted with the power to frame rules for non-debt instruments. It is however interesting to note that the Central Government is empowered to determine which