Foreign Exchange Management (Deposit) Regulations, 2025: Fifth Amendment [Read Notification]

The Reserve Bank of India ( RBI ) has issued Notification No. FEMA 5(R)(5)/2025-RB dated January 14, 2025, announcing key amendments to the Foreign Exchange Management (Deposit) Regulations, 2016.

These changes are introduced under the Foreign Exchange Management (Deposit) (Fifth Amendment) Regulations, 2025. These regulations will take effect on the date they are published in the Official Gazette.

1. Short Title and Commencement

The name of these regulations is “Foreign Exchange Management (Deposit) (Fifth Amendment) Regulations, 2025.”

2. Amendment to Sub-Regulation (4) of Regulation 5

• Previous Rule: The regulation referred to “authorised dealers in India” (i.e., financial institutions authorized to deal with foreign exchange within India).
• New Rule: Adds “or its branch outside India.”

Now, authorized dealers in India can also conduct foreign exchange transactions through their branches located outside India. This makes international banking and financial operations easier for Indian businesses and their overseas branches.

3. New Regulation: Transfer Between Repatriable Rupee Accounts

A new Regulation 9 has been added to allow the transfer of funds between repatriable Rupee accounts.

Repatriable Rupee accounts (accounts where funds can be transferred abroad freely) can now transfer funds between each other for legitimate (bona fide) purposes. This facilitates smoother transactions for account holders while adhering to regulations.

4. Changes to Schedule 4 – SNRR Account Rules

Paragraph 1 Revision:

Previous Rule: Focused only on opening an SNRR (Special Non-Resident Rupee) account for business purposes in India.

New Rule: Non-residents with business interests in India can now open SNRR accounts with authorized dealers in India or their branches outside India for:

• Transactions with Indian residents.
• Transactions with non-residents (foreign entities).

IFSC Rule:

Businesses in International Financial Services Centres (IFSC) under the Special Economic Zones Act, 2005 can open SNRR accounts outside the IFSC for business-related transactions.

Expands the scope of SNRR accounts to allow flexibility for international and Indian transactions, including businesses located in IFSCs.

5. Replacing “Indian bank” with “A bank”

• Previous Rule: Referred only to “Indian bank.”
• New Rule: Changed the term to “A bank.”

The term now includes any authorized bank, not just Indian ones. This broadens the scope and allows for flexibility in dealing with international banks.

6. New Tenure Rule for SNRR Accounts

• Previous Rule: Fixed tenure for SNRR accounts.
• New Rule: The tenure of the SNRR account will now match the duration of:
• The business contract.
• The operation period.
• The overall business of the account holder.

The validity of an SNRR account is tied directly to the length of the associated business activity, making it more aligned with practical needs.

7. Clarification: Adding “In India” to Various Paragraphs

In paragraphs 9, 11, and 12 of Schedule 4, after every mention of “SNRR account,” the words “in India” have been added.

8. Clarification: Adding “Having the SNRR Account in India”

In paragraph 13 of Schedule 4, after the words “account holder,” the phrase “having the SNRR account in India” has been added.

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