Relative A.P. (DIR) circular: A.P. (DIR Series) Circular No. 19 dated January 12, 2026
RESERVE BANK OF INDIA
(FOREIGN EXCHANGE DEPARTMENT)
CENTRAL OFFICE
MUMBAI 400 001
No. FEMA 8(R)/2026-RB
January 6, 2026
Foreign Exchange Management (Guarantees) Regulations, 2026
In exercise of the powers conferred by sub-section (2) of Section 6 and sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of
Notification No. FEMA 8/2000-RB dated May 3, 2000
, except as respects things done or omitted to be done before such supersession, the Reserve Bank of India makes the following regulations namely:
- Short title and Commencement
.- (1) These regulations may be called the Foreign Exchange Management (Guarantees) Regulations, 2026.
(2) They shall come into force from the date of their publication in the
Official Gazette
.
- Definitions
.- (1) In these regulations, unless the context otherwise requires,-
(a) “Act” means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) “Authorised dealer” means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Act;
(c) “Creditor” means a person to whom the guarantee is given;
(d) “Guarantee” including a “counter-guarantee” means a contract, by whatever name called, to perform the promise, or discharge a debt, obligation or other liability (including a portfolio of debts, obligations or other liabilities), in case of default by the principal debtor;
(e) “International Financial Services Centre” or “IFSC” shall have the same meaning as assigned to it in clause (g) of Section 3 of the International Financial Services Centres Authority, 2019 (50 of 2019);
(f) “Principal debtor” means a person in respect of whose default the guarantee is given;
(g) “Surety” means a person who gives a guarantee.
(2) The words and expressions used but not defined in these regulations shall have the same meanings respectively assigned to them in the Act or rules or regulations made thereunder.
- Prohibition.
- Save as otherwise provided in the Act or rules or regulations or directions issued under the Act or with the general or special permission of the Reserve Bank of India, no person resident in India shall, except in accordance with these regulations, be a party (principal debtor, surety or a creditor) to a guarantee where any of the other parties to the guarantee is a person resident outside India.
- Exemptions.-
Nothing contained in these Regulations shall apply to the following:
a guarantee undertaken by a branch of an authorised dealer bank outside India or in an IFSC, unless any of the other parties to the guarantee is a person resident in India.
an Irrevocable Payment Commitment (IPC) issued by an authorised dealer in its capacity of a custodian bank, where the principal debtor is a registered Foreign Portfolio Investor and the creditor is an authorised central counterparty in India.
a guarantee given in accordance with the
Foreign Exchange Management (Overseas Investment) Regulations, 2022
.
- Permission to act as a surety or a principal debtor.-
A person resident in India may act as a surety or a principal debtor for a guarantee, subject to conditions that –
(a) the underlying transaction for which the guarantee is being given or arranged is not prohibited under the Act or rules or regulations or directions issued under the Act; and
(b) the surety and the principal debtor are eligible to lend to and borrow from each other, respectively, under the
Foreign Exchange Management (Borrowing and Lending) Regulations, 2018
, as amended from time to time:
Provided that clause (b) shall not apply to a guarantee –
(i) given by an authorised dealer bank and covered by a counter-guarantee or issued against 100% collateral in the form of a deposit, from a person resident outside India; or
(ii) given by an agent in India of a shipping or airline company incorporated outside India on behalf of such company in connection with its obligation or liability owed to any statutory or Government authority in India; or
(iii) where both the surety and the principal debtor are persons resident in India.
- Permission to obtain a guarantee as a creditor
.- A person resident in India being a creditor may arrange or obtain a guarantee in its favour, subject to the condition that where the principal debtor and surety both are persons resident outside India, the creditor shall ensure that the underlying transaction is not prohibited under the Act, or rules or regulations or directions issued under the Act.
- Reporting requirements
.- (1) Guarantees covered under these regulations shall be reported –
by the surety where he is a person resident in India; or
by the principal debtor who has arranged the guarantee and where the surety is a person resident outside India; or
by the creditor where the surety and the principal debtor both are persons resident outside India or where the creditor has arranged the guarantee.
(2) The person having the obligation to report the guarantee shall report, (a) issuance of guarantee, (b) any subsequent change in guarantee terms, namely - guarantee amount, extension of period or pre-closure, and (c) invocation of guarantee, if any, in the format provided at
Annex
to these regulations.
(3) Reporting, as provided in sub-regulations (1) and (2), shall be made to an authorised dealer bank on a quarterly basis within fifteen calendar days from the end of the respective quarter for onward submission to the Reserve Bank of India.
(4) An authorised dealer bank shall submit the returns received under this regulation to the Reserve Bank of India in the manner and format advised for this purpose within thirty calendar days from the end of the respective quarter.
- Late Submission Fee for delayed reporting
.- (1) A person resident in India who does not meet its reporting obligations, as specified under sub-regulation (3) of regulation 7, may do such reporting along with Late Submission Fee or make payment of Late Submission Fee where such reporting has been done with a delay.
(2) The Late Submission Fee shall be ₹7500 + 0.025% x A x n, rounded upwards to the nearest hundred, where,
“n” is the number of years of delay in submission, rounded-upwards to the nearest month and expressed up to 2 decimal points; and
“A” is the amount involved in the delayed reporting in INR.
(Dr. Aditya Gaiha)
Chief General Manager-in-Charge
