The Reserve Bank of India has recently introduced an amendment under the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fifth Amendment) Regulations, 2025 (“FEMA”). The amendment aims to simplify exporters’ financial processes, facilitate smoother international trade operations, and allow exporters residing in India to open and maintain foreign currency accounts with banks outside India.
A new sub-regulation has been inserted vide notification no. FEMA 10(R)(5)/2025-RB dated January 14, 2025, in regulation 5 of the FEMA. This sub-regulation permits persons resident in India who are exporters to open, hold, and maintain foreign currency accounts with banks outside India for the realization of export receivables, including any export advances for goods and services. The funds in such accounts can be used by exporters to pay for import payables related to imports into India or repatriated to India within a period not exceeding the end of the next month from the date of receipt, after adjusting for forward commitments.
The key takeaways from the newly added sub-regulation are as follows:
- Indian exporters are now allowed to open and maintain a foreign currency account with a bank outside India.
- Exporters can receive the full payment for their exports and deposit advance payments received for goods or services exported.
- The funds can be used to pay for imports into India.
- The remaining funds must be repatriated to India by the end of the following month after receiving them, adjusted for any forward commitments.
Compliance with other regulations:
Exporters must still meet the requirements of Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, which deals with realizing and repatriating export proceeds within the specified timeline.
Source:
