RBI To Issue Draft On New FEMA Guidelines By End Of June

The Reserve Bank of India said on Friday that it would issue a new draft on the Foreign Exchange Management Act soon. In his monetary policy address, Governor Shaktikanta Das announced that the regulator has proposed to rationalise FEMA guidelines on export and import of goods and services.

The idea has been proposed with the view of changing dynamics of international trade. The change of FEMA guidelines would also promote ease of doing business and provide greater operational flexibility to authorised dealer banks, Das said.

"Keeping in view the progressive liberalisation under FEMA 1999 and to impart greater operational flexibility to Authorized Dealer banks, Reserve Bank has decided to rationalise existing guidelines on export and import of goods and services in line with the changing dynamics of cross-border trade transactions globally," the RBI's statement reads.

Accordingly, the draft regulations would be issued by the RBI by the end of June. After this, feedback from all stakeholders will be invited in order to finalise this.

In its financial year 2024 annual report too, the RBI mentioned that it is undertaking a review of Foreign Exchange Management (Deposit) Regulations, in consultation with the government. Hence, a proposal to rationalise mode of payment and reporting requirement regulations under FEMA Regulation 395 is also under review.

The RBI is also undertaking a review of Foreign Exchange Management (Guarantees) Regulations to address problems during cross-border transactions, faced by residents in India, according to the report.

The monetary policy committee kept the benchmark repo rate unchanged for the eighth straight meet, while being focused on 'withdrawal of accommodation', to ensure that inflation progressively aligns with the target while supporting growth.