The Reserve Bank of India (RBI), through A.P. (DIR Series) Circular No. 19 dated 17 July 2026, has issued a consolidated framework governing Special Rupee Vostro Accounts (SRVAs), superseding the earlier instructions issued between July 2022 and October 2025.
The revised framework consolidates and rationalises the existing instructions with the objective of providing a comprehensive framework for facilitating cross-border transactions in Indian Rupees (INR).
Key Highlights
- Opening of SRVAs
Authorised Dealer (AD) Category-I banks may open SRVAs for their overseas branches or correspondent banks resident outside India. These accounts facilitate settlement of transactions between Indian and overseas parties in INR. - Wider scope of transactions
The RBI has clarified that SRVAs may be used not only for settlement of export and import transactions, but also for all permissible current account and capital account transactions under FEMA, subject to the applicable regulatory requirements. - Dedicated accounts for exporters and importers
AD Category-I banks maintaining SRVAs may open dedicated current accounts for exporters and importers exclusively for the settlement of trade transactions. - Permitted funding and investment of surplus balances
The framework clarifies the permissible sources through which SRVAs may be funded. Further, surplus balances maintained in SRVAs may be invested in permitted debt instruments, subject to applicable RBI directions. - Documentation and reporting requirements
AD banks are required to comply with the prescribed documentation and reporting requirements in respect of SRVAs and transactions undertaken through such accounts. - SRVA Directory
The RBI has provided that details of SRVAs maintained by overseas correspondent banks with AD banks in India may be periodically updated in the SRVA Directory published by the Foreign Exchange Dealers’ Association of India (FEDAI). This is expected to enhance transparency and facilitate identification of available INR settlement channels.
Impact
The consolidated framework provides greater clarity and operational flexibility for INR-based cross-border settlement. By permitting SRVAs to be used for a wider range of permissible current and capital account transactions, the framework strengthens the role of the INR in international transactions and provides Indian banks and overseas counterparties with a more structured mechanism for INR settlement.
The revised instructions came into effect immediately from 17 July 2026.
The Reserve Bank of India (RBI) has released the draft Foreign Exchange Management (Foreign Investment) Rules, 2026 for public consultation as part of a comprehensive review of the existing Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
Key Highlights
- Simplified and principle-based framework
The draft Rules seek to establish a more simplified and principle-based regulatory framework by rationalising existing provisions and removing unnecessary regulatory complexity. - Harmonisation of definitions
The proposed framework aims to harmonise definitions and terminology used across the foreign investment regulations, thereby providing greater clarity and consistency in their interpretation and application. - Separation of regulatory and policy requirements
The draft Rules propose to distinguish procedural requirements under FEMA from sector-specific foreign direct investment (FDI) policy provisions. This is intended to provide greater clarity regarding the respective regulatory and policy requirements applicable to foreign investments. - Streamlined compliance and greater flexibility
The proposed changes seek to reduce compliance complexity and provide greater operational flexibility to businesses undertaking foreign investment transactions. - Investor-neutral and investee-neutral approach
The draft framework proposes an investor-neutral and investee-neutral regulatory approach, aligned with evolving business models and investment practices, while retaining appropriate regulatory safeguards.
Stakeholder Consultation
The RBI has invited comments and feedback from stakeholders on the draft Rules. Suggestions may be submitted through the “Connect 2 Regulate” portal available on the RBI website or through email on or before 31 August 2026.
The final Foreign Exchange Management (Foreign Investment) Rules, 2026 will be notified after consideration of the feedback received from stakeholders.
Impact
The proposed Rules represent a significant step towards simplifying and modernising India’s foreign investment regulatory framework. If implemented in the proposed form, the revised framework is expected to provide greater clarity, reduce regulatory friction and facilitate ease of doing business while maintaining necessary safeguards for foreign investment transactions.
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