This Reserve Bank of India (RBI) Notification No. FEMA 3(R)(4)/2025-RB, dated October 06, 2025, introduces an amendment to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. Specifically, the amendment inserts a new clause, (iv), into sub-regulation 7A of the Principal Regulations. The core change permits an Authorised Dealer (AD) Category-I bank in India to lend in Indian Rupees (INR) to a person resident outside India, provided that the recipient is a resident of Bhutan, Nepal, or Sri Lanka. This lending facility, which also includes banks in these three specific jurisdictions, is strictly intended for cross-border trade transactions. This regulatory modification expands the scope of INR lending by AD banks to facilitate trade with these neighboring countries. The amendment is titled the Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2025 and becomes effective upon its publication in the Official Gazette i.e October 06, 2025.
RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI – 400 001
Notification No. FEMA 3(R)(4)/2025-RB October 06, 2025
Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2025
No. FEMA 3(R)(4)/2025-RB – In exercise of the powers conferred by sub-section (2) of Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (Notification No. FEMA.3(R)/2018-RB dated December 17, 2018) (hereinafter referred to as ‘the Principal Regulations’), namely:
1. Short Title & Commencement.- (1) These Regulations may be called the Foreign Exchange Management (Borrowing and Lending) (Amendment) Regulations, 2025.
(2) They shall come into force from the date of notification in the official gazette.
2. In the principal regulations, in regulation 7 sub-regulation A, after clause (iii), the following clause (iv) shall be inserted, namely:-
“An AD bank may lend in Indian Rupees to a person resident outside India being a resident in Bhutan, Nepal or Sri Lanka, including a bank in these jurisdictions, for cross border trade transactions.”
(Dr. Aditya Gaiha)
Chief General Manager-in-Charge
Footnote: The Principal Regulations were published in the Official Gazette vide G.S.R.No.1213(E) dated December 17, 2018, in Part II, Section 3, sub-Section (i) and subsequently amended vide the following, namely;
Notification G.S.R No.163(E) dated 26.02.2019
Notification No. FEMA.3(R)2/2021-RB 24.05.2021
Notification No. FEMA.3(R)(3)/2022-RB dated 28.07.2022
