The Monetary Policy Commitee, headed by Reserve Bank of India (RBI) governor Sanjay Malhotra, has announced a series of steps aimed at easing rules for Non-Resident Indians (NRIs) and widening the role of the Indian Rupee in global trade. The measures cover foreign exchange management, trade-linked transactions, remittance flows, and investment opportunities.
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Simplifying business presence and borrowing rules
The RBI has proposed to simplify regulations under the Foreign Exchange Management Act (FEMA) for non-residents. This includes a rationalisation of the External Commercial Borrowing (ECB) framework covering eligible borrowers, recognised lenders, borrowing limits, costs, and reporting requirements. In addition, non-residents looking to set up a business presence in India will face fewer regulatory hurdles. These changes are aimed at making India a more attractive and accessible destination for NRI entrepreneurs and investors.
Expanding Rupee internationalisation
In a significant move, the RBI has decided to expand the use of the Indian Rupee in cross-border transactions. Authorised dealer banks will be permitted to lend in INR to non-residents in Bhutan, Nepal, and Sri Lanka to support trade activities. The central bank will also set up transparent reference rates for currencies of India’s major trading partners, making Rupee-based trade more reliable. Further, balances in Special Rupee Vostro Accounts (SRVAs) can now be deployed for investments in corporate bonds and commercial papers. This opens up new avenues for NRIs and overseas institutions to transact and invest in India using the Rupee.
Flexibility for exporters and trade transactions
To support exporters, the RBI has extended the repatriation period for funds in International Financial Services Centre (IFSC) accounts from one month to three months. The forex outlay period for Merchanting Trade transactions has also been increased from four months to six months. These steps provide additional breathing space for NRIs engaged in export-import and trade-linked businesses, giving them more time to manage transactions and comply with regulations.
Higher investment limits in Indian companies
The central bank is considering a proposal to raise the investment cap for individual foreign investors, including NRIs, in listed Indian companies. The individual cap, currently at 5 per cent, could be doubled to 10 per cent. The combined ceiling for overseas individuals is also expected to rise from 10 per cent to 24 per cent. If implemented, this would allow NRIs greater access to Indian equity markets and a stronger stake in the country’s corporate sector.
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Review of remittance rules
With outward remittances under the Liberalised Remittance Scheme (LRS) touching 30 billion dollars in FY25, the RBI has decided to review the framework. The review will focus on rationalising the rules and promoting greater use of the Rupee in international transfers. For NRIs, this could bring clarity on remittance limits, eligible investments, and currency options, potentially reshaping the way money is sent abroad.
Expanding digital payment access for NRIs
Indian banks are increasingly enabling NRIs to use domestic digital payment systems. Unified Payments Interface (UPI) transactions have been made available in several countries using international mobile numbers linked to NRE and NRO accounts, allowing seamless Rupee payments without requiring an Indian SIM. The RBI has also introduced new rules for cross-border card transactions, giving banks flexibility to apply risk-based authentication. These measures make it easier and safer for NRIs to manage transactions across borders.
What it means for NRIs
The latest set of measures reflects RBI’s intent to bring NRIs closer to India’s financial ecosystem while boosting the international role of the Rupee. By easing rules for business entry, expanding investment caps, reviewing remittance norms, and opening up digital payments, the central bank is offering NRIs wider opportunities and greater convenience. These steps are expected to strengthen their participation in India’s growth and financial markets.