Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2025

Introduction

These regulations shall be called the Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2025 and shall come into force with date of their publication in the Official Gazette on 4^th February 2025.

In exercise of the powers conferred by section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes the following amendment in the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023

Background

Definitions (i) ‘Act’ means the Foreign Exchange Management Act, 1999 (42 of 1999); (ii) ‘Authorised Bank’ shall have the same meaning as given in the Foreign Exchange Management (Deposit) Regulations, 2016 as amended from time to time.

1. Manner of receipt and payment –  Save as otherwise in a manner as provided in the Act or the rules or regulations made or directions issued under the Act, no person resident in India shall make or receive payment from a person resident outside India:
   Provided that the Reserve Bank may, on an application made to it, permit a person resident in India to make or receive payment under the Act.
2. The receipt and payment between a person resident in India and a person resident outside India shall, unless provided otherwise, be made through an authorised bank or authorised person and in the manner as specified below:

Trade transactions – Receipt/Payment for export to or import from the countries given below of eligible goods and services shall be made as under:

Nepal and Bhutan- In Indian Rupees provided that in case of exports from India where the importer in Nepal has been permitted by the Nepal Rashtra Bank to make payment in foreign currency, such receipts towards the amount of the export may be in foreign currency;

• Member countries of Asian Clearing Union (hereinafter referred to as “ACU”), other than Nepal and Bhutan – In respect of payments from a resident in the territory of one participant country to a resident in the territory of another participant country, through ACU mechanism, or as per the directions issued by the Reserve Bank to authorised dealers from time to time. For all other transactions, receipt and payment may be made in a manner as specified below;
• Countries other than member countries of ACU– In Indian Rupees or in any foreign currency.

Notwithstanding anything contained in this sub-regulation, receipts and payments may also be made in a manner as may be provided in the extant Foreign Trade Policy framed by the Central Government.

Transactions other than trade transactions – receipt and payment shall be made as under:

• Nepal and Bhutan- In Indian Rupees provided that in case of overseas investment in Bhutan, payment may also be made in foreign currency;
• Other Countries– In Indian Rupees or any foreign currency.

3. Payment and receipt in India for any current account transaction, other than a trade transaction, between any person resident in India and a person resident outside India, who is on a visit to India, may be made only in Indian Rupees.

Provided that any payment or receipt under regulation 3 may also be made by debit/ credit to a bank account maintained in terms of the rules, regulations or directions issued under the Act.

Amendment to Regulation 3:

In the Principal Regulations, in regulation 3, in sub-regulation (2), in clause (I), in sub-clause (a), for the item (ii) along with its proviso, the following shall be substituted, namely: –

“(ii) Member countries of ACU, other than Nepal and Bhutan – In respect of payments from a resident in the territory of one participant country to a resident in the territory of another participant country, through ACU mechanism, or as per the directions issued by the Reserve Bank to authorised dealers from time to time. For all other transactions, receipt and payment may be made in a manner as specified at (iii).”

Conclusion

The Trade transactions (ii) Member countries of Asian Clearing Union (hereinafter referred to as “ACU”), other than Nepal and Bhutan was amended in Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2025 as on 4^th February 2025 that (i) In respect of payments from a resident in the territory of one participant country to a resident in the territory of another participant country through ACU mechanism, (ii) As per the directions issued by the Reserve Bank to authorised dealers from time to time, and (iii) All other transactions, In Indian Rupees or in any foreign currency.