The Reserve Bank of India, in collaboration with the central government, has reviewed current regulations under the Foreign Exchange Management Act, 1999.

In a statement on Thursday, the central bank said the move is to promote cross-border transactions in rupees and other local or national currencies.

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The amendments made to the existing FEMA guidelines are that the authorised dealer banks’ overseas branches can now open INR accounts for residents outside India, facilitating the settlement of all permissible current and capital account transactions with residents in India.

It also said that the residents outside India can use the balances in their repatriable INR accounts, such as the Special Non-resident Rupee Account (SNRA) and SRVA, to settle legitimate transactions with other non-resident individuals.

Further, the residents outside India can use their repatriable INR account balances for foreign investments, including Foreign Direct Investment (FDI) in non-debt instruments.

Indian exporters are now allowed to open foreign currency accounts abroad to settle trade transactions, receive export proceeds, and use those funds to pay for imports, it said.

Notably, the Reserve Bank has also signed Memorandum of Understanding (MoU) with the central banks of the United Arab Emirates, Indonesia and Maldives, to encourage cross-border transactions in local currencies.

Further, in December 2023 the Foreign Exchange Management (Manner of Receipt and Payment) Regulations were revised to enable cross border transactions in all foreign currencies (including local currencies of trading partner countries) and INR.

To further encourage the use of the Indian rupee (INR) in international trade, the Special Rupee Vostro Account (SRVA) was introduced in July 2022.