RBI’s Sixth Amendment To The FEMA (Deposit) Regulations: Liberalising The Framework For Special Non-resident Rupee (SNRR) Accounts

Introduction

On June 18, 2026, the Reserve Bank of India (RBI) notified the Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026 through Notification No. FEMA 5(R)(6)/2026-RB. The amendments introduce significant changes to the Foreign Exchange Management (Deposit) Regulations, 2016, with a primary focus on liberalising the regulatory framework governing Special Non-Resident Rupee (SNRR) Accounts.

The reforms aim to simplify banking arrangements for non-residents, strengthen the role of International Financial Services Centres (IFSCs), and support India’s growing cross-border financial ecosystem.

Expansion of the SNRR Account Framework

SNRR accounts were introduced in 2016 to enable persons resident outside India to undertake permissible current and capital account transactions in Indian Rupees while maintaining segregation from Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts.

Under the Sixth Amendment, the RBI has substantially expanded the scope and utility of these accounts. A significant change is the removal of the requirement that a person resident outside India must have a “business interest in India” to open an SNRR account, thereby widening access to the facility.

A key reform is the substitution of Paragraph 1 of Schedule 4, allowing non-residents to open and maintain SNRR accounts with:

• Authorised dealers in India
• Overseas branches of authorised dealers
• IFSC branches of authorised dealers

The accounts may now be used for permissible current and capital account transactions, as well as bona fide transactions with other non-residents, enhancing flexibility for multinational businesses, foreign investors, and cross-border operations.

Recognition of IFSC Branches

The amendment also formally recognises International Financial Services Centres (IFSCs) within the Deposit Regulations by incorporating the definition contained in the International Financial Services Centres Authority Act, 2019.

Consequently, non-residents may now maintain SNRR accounts with banking units operating in IFSCs, such as GIFT IFSC. This integration is likely to facilitate:

• Greater participation by foreign financial institutions, investment funds, and international businesses
• Further strengthening of the role of IFSCs in India’s cross-border financial ecosystem

Greater Flexibility in Movement of Funds

Transfers Between Non-Resident Accounts

The amendment provides greater flexibility in transfers between non-resident accounts by permitting transfers from NRO accounts to NRE and SNRR accounts, subject to the limits prescribed under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. It also clarifies that transfers from NRO accounts to SNRR accounts will be governed by the applicable provisions of the Deposit Regulations.

Removal of Operational Restrictions

The Sixth Amendment removes several operational restrictions on SNRR accounts by deleting Paragraphs 2, 5, 6, 7 and 8 of Schedule 4. Earlier, SNRR accounts were subject to conditions relating to tenure, operation, and usage, including a maximum validity period of seven years unless extended by the RBI.

The deletion of these provisions provides greater operational flexibility for eligible account holders.

Shift Towards a Principles-Based Approach

The amendments also indicate a shift towards a more principles-based regulatory approach by placing greater responsibility on authorised dealer banks to ensure FEMA compliance and alignment with the purpose of the account. This reduces operational complexity and provides greater flexibility to foreign businesses maintaining long-term commercial relationships in India.

Additionally, Paragraph 16 in Schedule 4 permits authorised dealer banks to process certain transactions between non-residents through SNRR accounts based on the account holder’s instructions and the stated purpose of the transfer, where such transactions are not otherwise subject to FEMA requirements.

Conclusion

The Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026 mark a significant modernisation of India’s non-resident deposit framework by enhancing the flexibility and commercial utility of SNRR accounts through:

• Expanded eligibility for opening SNRR accounts
• Broader permissible transactions
• Recognition of IFSC banking operations
• Removal of operational restrictions

The reforms reflect the RBI’s continued efforts to facilitate cross-border financial transactions, improve ease of doing business for foreign investors and multinational enterprises, and support India’s growth as a competitive international financial centre.

Last Updated on 16 July, 2026