The Reserve Bank of India has issued the Foreign Exchange Management (Guarantees) Regulations, 2026, replacing the 2000 framework and setting out when persons resident in India may participate in guarantees that involve a person resident outside India. The rules set conditions for residents acting as surety or principal debtor, allow resident creditors to obtain guarantees subject to checks on the underlying transaction, and introduce a quarterly reporting regime with a late submission fee for delayed filings. The regulations prohibit a person resident in India from being a party to a guarantee with any non-resident party unless permitted under FEMA or RBI permission. Exemptions cover certain guarantees by overseas or International Financial Services Centre branches of authorised dealer banks (unless any other party is India-resident), specified Irrevocable Payment Commitments issued by authorised dealers as custodian banks where the principal debtor is a registered Foreign Portfolio Investor and the creditor is an authorised central counterparty in India, and guarantees given under the Foreign Exchange Management (Overseas Investment) Regulations, 2022. Residents may act as surety or principal debtor if the underlying transaction is not prohibited and the parties are eligible to lend and borrow under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, with carve-outs including authorised dealer bank guarantees backed by a non-resident counter-guarantee or 100% deposit collateral, and certain guarantees given by Indian agents of foreign shipping or airline companies for statutory or government dues in India. Guarantees must be reported quarterly to an authorised dealer bank within 15 calendar days after quarter-end, covering issuance, changes in amount or tenor or pre-closure, and invocation, with the authorised dealer bank submitting returns to the Reserve Bank of India within 30 calendar days after quarter-end. Delayed reporting by a resident can be regularised with a late submission fee of INR 7,500 plus 0.025% x A x n (rounded up to the nearest hundred), where A is the amount involved and n is the period of delay expressed in years rounded up to the nearest month. The regulations take effect from the date of publication in the Official Gazette.
Reserve Bank of India 2026-01-12
Reserve Bank of India replaces FEMA cross-border guarantee rules with new exemptions quarterly reporting and late submission fee formula
The Reserve Bank of India has introduced the Foreign Exchange Management (Guarantees) Regulations, 2026, replacing the 2000 framework, detailing conditions under which Indian residents can engage in guarantees involving non-residents. The regulations mandate quarterly reporting of guarantees with a late submission fee for delays, and include specific exemptions and conditions for participation, effective upon publication in the Official Gazette.