FEMA Export and Import Regulations, 2026: Role & Responsibilities of Authorised Dealer (AD) Banks 

Introduction

The Reserve Bank of India (RBI) issued the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 under Notification No. FEMA 23(R)/2026-RB dated 13 January 2026. The Regulations came into force on 1 October 2026, replacing the earlier Foreign Exchange Management (Export of Goods and Services) Regulations, 2015. 

The Regulations establish a consolidated framework under the Foreign Exchange Management Act, 1999 (FEMA), for regulating cross-border trade in goods and services, including merchanting trade transactions. The accompanying RBI directions assign Authorised Dealer (AD) banks an important role in transaction processing, compliance monitoring, reporting and customer service. 

This update examines the key compliance responsibilities of AD banks under the revised framework. 

Key Compliance Obligations of Authorised Dealer Banks

1.Verification of Transactions and EDPMS/IDPMS Record-Keeping 

AD banks are responsible for ensuring that export and import transactions handled by them comply with FEMA, the applicable rules and regulations, RBI directions and the prevailing Foreign Trade Policy. 

AD banks must maintain appropriate records and ensure the processing, monitoring and closure of relevant entries in the Export Data Processing and Monitoring System (EDPMS) and the Import Data Processing and Monitoring System (IDPMS), or other systems specified by the RBI. 

For imports of goods or services where the Bill of Entry or invoice, as applicable, is up to ₹10 lakh (or its equivalent in foreign currency), an IDPMS entry may be closed on the basis of an importer’s declaration that payment has been made, either in full or otherwise. Alternatively, the importer may submit such a declaration quarterly for bulk closure of entries, in accordance with the applicable provisions.

2. Export Declaration Forms (EDF) & Payment Timelines 

Under Regulation 3 of the 2026 Regulations, exporters of goods must submit an Export Declaration Form (EDF) specifying the full export value at the time of export. For goods exported through Electronic Data Interchange (EDI) ports, the EDF is deemed to have been submitted as part of the shipping bill. 

Exporters of services must generally submit an EDF within 30 days from the end of the month in which the invoice is raised. The Regulations permit consolidated declarations and provide for certain alternative filing arrangements and extensions, subject to the applicable conditions. 

Following the amendments effective from 1 October 2026, the export realisation and repatriation period under Regulation 5 is generally nine months from the date of shipment for goods, other than goods exported to a warehouse outside India, and from the date of invoice for services. For goods exported to a warehouse outside India, the period is nine months from the date of sale from the warehouse. 

Where exports are invoiced or settled in Indian rupees, the applicable period is 12 months. Project exports are governed by the payment terms of the contract. AD banks may extend the applicable period for realisation and repatriation upon an exporter’s request, subject to the conditions prescribed under the Regulations. 

AD banks must also monitor import payments in accordance with the applicable regulatory requirements and contractual arrangements. 

3. Advance Import Payments and Trade Adjustments

AD banks must process advance import payments in accordance with the applicable FEMA framework and RBI directions. Where required under the relevant provisions, banks may seek appropriate safeguards, including bank guarantees or Standby Letters of Credit (SBLCs). 

• Subject to the applicable regulatory conditions, AD banks may also process permitted trade adjustments, including: 
• Set-off of export receivables against import payables, where the prescribed conditions are satisfied; 
• Third-party export receipts and import payments, subject to applicable requirements and verification of the transaction’s bona fides; and 
• Merchanting trade transactions in accordance with the relevant FEMA provisions and RBI directions. 
• These arrangements remain subject to the applicable eligibility criteria, documentation and compliance requirements. The Regulations should not be interpreted as granting AD banks unrestricted discretion to approve all such transactions. 

4. Regulatory Reporting, Customer Charges and Internal Governance

The RBI directions require AD banks to maintain a separate, comprehensive and documented internal policy and Standard Operating Procedure (SOP) for handling export and import transactions, including merchanting trade and related reporting. 

The policy and SOP must address matters such as documentation, applicable timelines and charges, extensions of prescribed periods, adjustments to export proceeds, advance receipts and payments, internal approval responsibilities and factoring arrangements. Banks must also establish appropriate escalation procedures and an appeal mechanism for customer grievances. 

AD banks must ensure that charges for handling transactions and associated processes are reasonable and proportionate to the services rendered. They must disclose their policy and the main features of the SOP on their websites. The directions also prohibit charging customers penalties for regulatory delays or violations attributable to the customer, as specified in the applicable provisions. 

Under the accompanying RBI directions, AD banks must send references to the RBI through the PRAVAAH portal and inform the Directorate of Enforcement (DoE) of doubtful transactions. 

Conclusion

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, read with the subsequent amendment and accompanying RBI directions, establish a consolidated and principle-based framework for cross-border trade compliance. The framework places significant responsibility on AD banks to ensure appropriate transaction processing, monitoring, reporting and customer service. 

The reduction in the standard export realisation period to nine months, and to 12 months for exports invoiced or settled in Indian rupees, makes timely monitoring particularly important. AD banks and businesses engaged in cross-border trade should review their internal procedures, documentation, invoicing practices and payment arrangements to ensure compliance with the framework effective from 1 October 2026. 

Last Updated on 28 October, 2026