RBI Expands Cross-Border Lending in Indian Rupees

The Reserve Bank of India (RBI) has announced a significant policy update, allowing Indian banks and their overseas branches to extend loans in Indian Rupees to residents of Bhutan, Nepal, and Sri Lanka. This move is aimed at facilitating cross-border trade transactions.

This policy shift comes alongside amendments to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, and the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015. These changes are part of ongoing efforts to ease external trade and payment processes.

Additionally, the RBI has extended the repatriation period for foreign currency accounts maintained in the Indian International Financial Services Centre (IFSC). The new policy increases the repatriation timeframe to three months, providing more flexibility for Indian exporters managing their foreign currency accounts.

(With inputs from agencies.)