Banks in India and their overseas branches have been permitted to lend in the Rupees to residents of Bhutan, Nepal, and Sri Lanka to facilitate cross border trade transactions, the Reserve Bank said on Monday.
The regulator has announced these measures on October 1 while detailing the outcome of monetary policy. These amendments under the Foreign Exchange Management Act are part of its continuous efforts towards ‘facilitating external trade and payments’, according to the release.
The RBI has also extended the period for repatriation up to three months in case of foreign currency accounts maintained with a bank in the IFSC in India. This will encourage more exporters to open accounts with IFSC banking units.
In January 2025, the RBI permitted exporters to open foreign currency accounts with a bank outside India for realisation of export proceeds. Unutilised balances in these accounts are required to be repatriated by the end of month next to the date of realisation.
With these measures, the RBI also looks to push the domestic currency to the forefront and promote internationalisation of the rupee.