RBI Notifies New FEMA Regulations for Cross-Border Guarantees, Makes Quarterly Reporting Mandatory [Read Notification]

The Reserve Bank of India (RBI) issued notification on 6 January 2026 about the Foreign Exchange Management (Guarantees) Regulations, 2026. This notification replaces the old guarantee rules from 2000 and gives new guidelines for cross-border guarantees under the Foreign Exchange Management Act (FEMA), 1999.

These new rules are for guarantees where one party in India and the other outside India. A guarantee means a promise by one party to pay or fulfill an obligation if the main borrower is not able to do it.

Such guarantees are common in international trade, overseas loans, and global business deals.

Key points of the RBI notification

Restriction on guarantees: A person living in India cannot be part of a guarantee involving a non-resident unless it is allowed under FEMA or these new regulations.

Who can give or receive guarantees: Indian residents may act as guarantors or borrowers only if the underlying transaction is permitted under foreign exchange laws. Indian residents can also receive guarantees as creditors, subject to conditions.

Exemptions provided:

Some guarantees are kept outside these rules, including:

• Guarantees issued by overseas branches of Indian banks
• Irrevocable Payment Commitments issued by custodian banks for foreign portfolio investors
• Guarantees issued under overseas investment regulations

Quarterly reporting made mandatory: All covered guarantees must be reported every quarter to an Authorised Dealer (AD) bank, which will forward the details to the RBI.

Reporting is required for:

• Issuance of a guarantee
• Any change, extension, or early closure
• Invocation of the guarantee

Late submission fees: Delays in reporting will attract a penalty based on the amount involved and the period of delay.

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