Notification/Circular No.: FEMA 3(R)(4)/2025-RB dated October 06, 2025
Applicable Act/Rule: Foreign Exchange Management Act, 1999
Effective Date – October 06, 2025
The Reserve Bank of India (RBI) has notified the Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2025 to facilitate cross-border trade transactions with neighbouring countries. This amendment modifies the 2018 principal regulations to enhance financial connectivity and ease of trade settlement with Bhutan, Nepal, and Sri Lanka.
In the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, under Regulation 7A, after clause (iii), the following clause (iv) has been inserted:
“(iv) An AD bank may lend in Indian Rupees to a person resident outside India being a resident in Bhutan, Nepal or Sri Lanka, including a bank in these jurisdictions, for cross border trade transactions.”
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