Reserve Bank of India amends exporter foreign currency account rules to recognise IFSCs and extend repatriation timelines for IFSC-held funds

The Reserve Bank of India has amended its Foreign Exchange Management rules on foreign currency accounts held by persons resident in India, updating the framework for exporters’ foreign currency accounts and explicitly bringing International Financial Services Centres (IFSCs) within the scope of accounts treated as opened “outside India/abroad”. Under the revised provision, an exporter resident in India may open, hold and maintain a foreign currency account with a bank outside India for realisation of full export value and advance remittances received for export of goods or services. Funds in the account may be used to pay for the exporter’s imports into India or repatriated into India, with repatriation required by the end of three months for accounts maintained with banks in an IFSC and by the next month for all other jurisdictions, in each case measured from receipt of funds after adjusting for forward commitments; applicable realisation and repatriation requirements under the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 must also be met. The amendment also adds a definition of “International Financial Services Centre/IFSC” by cross-reference to the International Financial Services Centres Authority Act, 2019 and takes effect from publication in the Official Gazette.