1) RBI Liberalises Special Non-Resident Rupee (SNRR) Account Framework
The Reserve Bank of India (RBI), vide the Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026 dated 18 June 2026, has significantly liberalised the regulatory framework governing Special Non-Resident Rupee (SNRR) Accounts. The amendments aim to simplify access to SNRR accounts, facilitate cross-border Rupee transactions, and support the broader objective of internationalisation of the Indian Rupee.
Key Highlights
Removal of Business Interest Requirement
The most significant change is the removal of the requirement that a non-resident must have a business interest in India to open an SNRR account. Under the revised regulations, any person resident outside India may now open and maintain an SNRR account with:
- An Authorised Dealer (AD) Bank in India;
- An overseas branch of an AD Bank; or
- A branch of an AD Bank located in an International Financial Services Centre (IFSC).
Expanded Scope of Transactions
The amended regulations broaden the operational flexibility of SNRR accounts by permitting a wider range of transactions in accordance with FEMA and RBI directions. The framework has also been simplified by removing several restrictive provisions that previously limited the usage of these accounts.
Transfer from NRO Accounts
The regulations now expressly permit transfers from Non-Resident Ordinary (NRO) Accounts to SNRR accounts, providing greater flexibility in fund management for eligible non-residents and facilitating smoother movement of funds within the FEMA framework.
Practical Implications
The liberalised framework is expected to benefit foreign investors, multinational corporations, overseas financial institutions, and other non-residents undertaking Rupee-denominated transactions with India. Key benefits include:
- Simplified eligibility for opening SNRR accounts.
- Greater flexibility in cross-border Rupee transactions.
- Improved fund management through permitted transfers from NRO accounts.
- Enhanced ease of doing business for foreign investors and global enterprises.
- Continued support for the internationalisation of the Indian Rupee.
2) RBI Restores Nine-Month Timeline for Realisation of Export Proceeds
The Reserve Bank of India (RBI), vide Notification No. FEMA 23(R)/(8)/2026-RB dated 5 June 2026, has amended the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, restoring the prescribed period for realisation and repatriation of export proceeds from 15 months to 9 months. The amendment comes into effect from 05th June 2026.
Practical Implications
The restoration of the nine-month timeline requires exporters to revisit their credit terms, collection mechanisms and internal compliance processes. Businesses with extended customer payment cycles should closely monitor outstanding export receivables and engage with their Authorised Dealer (AD) Banks wherever delays in realisation are anticipated.
Exporters should also ensure timely reconciliation of shipping bills and inward remittances through the Export Data Processing and Monitoring System (EDPMS) to avoid compliance issues under FEMA.
3) RBI Liberalises Foreign Portfolio Investment Framework under Schedule III
The Reserve Bank of India (RBI), vide A.P. (DIR Series) Circular No. 14 (RBI/2026-27/114) dated 15 June 2026, has operationalised the recent amendments to Schedule III of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, significantly expanding the scope of Foreign Portfolio Investment (FPI) in listed Indian companies.
The circular implements the Government’s liberalised investment framework by allowing all persons resident outside India to invest in the equity instruments of listed Indian companies through recognised stock exchanges in India, subject to the applicable provisions of FEMA and SEBI regulations.
Key Highlights
Expanded Investor Eligibility
Earlier, investment under Schedule III through recognised stock exchanges was largely restricted to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). Under the revised framework, all individual persons resident outside India are now permitted to invest in equity instruments of listed Indian companies through recognised stock exchanges in India, thereby broadening access to India’s capital markets.
Repatriable INR Accounts
To facilitate these investments, Authorised Dealer (AD) Category-I Banks have been permitted to open repatriable Indian Rupee (INR) accounts for eligible investors. These accounts will enable seamless investment, receipt of sale proceeds, and repatriation of funds in accordance with FEMA regulations.
Reporting and Monitoring Framework
The RBI has clarified that transaction reporting, monitoring of investment limits, and operational procedures for these investors will continue to follow the existing framework currently applicable to NRIs and OCIs. This ensures continuity in regulatory oversight while extending the investment facility to a wider class of foreign investors.
Reclassification from FPI to FDI
The circular also provides that any reclassification of investments from Foreign Portfolio Investment (FPI) to Foreign Direct Investment (FDI) shall be undertaken strictly in accordance with the framework prescribed by the RBI and the applicable FEMA provisions.
Compliance Requirements for Banks
AD Category-I Banks have been advised to establish appropriate internal systems and procedures to ensure compliance with FEMA, RBI directions and applicable SEBI regulations while facilitating investments under the revised framework.
Practical Implications
The liberalised framework is expected to encourage broader foreign participation in India’s equity markets by expanding the investor base beyond NRIs and OCIs. The simplified banking arrangements and continued reliance on the existing reporting framework are likely to improve operational efficiency while maintaining regulatory oversight.
Authorised Dealer Banks, market intermediaries and listed companies should review their internal processes to ensure compliance with the revised operational guidelines and reporting requirements.
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