Foreign Exchange Management Mode of Payment and Reporting of Non-Debt Instruments Amendment Regulations

Reserve Bank of India Foreign Exchange Department Central Office Mumbai - 400001

Notification No. FEMA. 395(4)/2026-RB

June 13, 2026

Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026

In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments to the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 [Notification No. FEMA.395/2019-RB dated October 17, 2019] (hereinafter referred to as ‘the Principal Regulations) namely:-

1. Short Title & Commencement (i) These Regulations may be called the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026. (ii) They shall come into force from the date of their publication in the Official Gazette.

2. In the principal regulations, in regulation 3.1, for the existing provision at Sl. No. III and X, the following shall be substituted, namely:

Schedule of the Rules Instructions on Mode of payment and Remittance of sale proceeds

III. Schedule III (Investments by an individual person resident outside India including Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on repatriation basis)

A. Mode of Payment (1) The amount of consideration shall be paid as inward remittance from abroad through banking channels or out of funds held in any repatriable deposit account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. (2) A repatriable rupee account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016, shall be designated by an individual person resident outside India and the same shall be used exclusively for investments permitted under this Schedule. (3) Subscription to National Pension System by NRIs/OCIs shall be paid as inward remittance from abroad through banking channels or out of funds held in any repatriable foreign currency or rupee account or NRO account, maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

B. Remittance of sale proceeds (1) The sale proceeds (net of taxes) of equity instruments may be remitted outside India or may be credited to designated rupee account of the person concerned. (2) The sale proceeds (net of taxes) of units of mutual funds and subscription to National Pension System by NRIs/OCIs may be remitted outside India or, may be credited to any account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016 at the option of the NRI/OCI investor.

X. Schedule XI (Purchase or Subscription of Equity Shares of Companies Incorporated in India on International Exchanges Scheme by Permissible Holder)

A. Mode of Payment (1) The amount of consideration for purchase / subscription of equity shares of an Indian company listed on an International Exchange shall be paid, - (i) through banking channels to a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time; or (ii) as inward remittance from abroad through banking channels or out of funds held in any repatriable foreign currency or rupee account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016

Explanation: The proceeds of purchase / subscription of equity shares of an Indian company listed on an International Exchange shall either be remitted to a bank account in India or deposited in a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time.

B. Remittance of sale proceeds The sale proceeds (net of taxes) of the equity shares may be remitted outside India or may be credited to the bank account of the permissible holder maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

3. Amendment to Regulation 4 of the Principal Regulations In sub-regulation (9) of Regulation 4 of the Principal Regulations, the existing provision shall be substituted by the following, namely:

“ LEC (Individual Foreign Investor - IFI): The designated Authorised Dealer Category I banks shall report to the Reserve Bank in Form LEC (IFI) the purchase / transfer of equity instruments by an individual person resident outside India including Non-Resident Indians or Overseas Citizens of India on stock exchanges in India”.

ROHIT P. DAS,
Regional Director

Foot Note:
The Principal Regulations were published in the Official Gazette of Government of India vide G.S.R.No.795(E) dated 17.10.2019 in Part II, Section 3, sub-Section (i) and subsequently amended, vide:
Notification no. FEMA 395(1)/2020-RB [Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2020] dated June 15, 2020, published in the Gazette of India [Extraordinary, Part III–Section 4], vide Gazette ID CG-MH-E-19062020-220016 dated 18.06.2020.
Notification no. FEMA 395(2)/2024-RB [Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2024] dated April 19, 2024, published in the Gazette of India [Extraordinary, Part III–Section 4], vide Gazette ID CG-MH-E-23042024-253830 dated 23.04.2024.
Notification No. FEMA 395(3)/2025-RB [Foreign Exchange Management (Mode of Payment and Reporting of Non- Debt Instruments) (Third Amendment) Regulations, 2025] dated January 15, 2025 published in the Gazette of India [Extraordinary, Part III–Section 4], vide Gazette ID CG-MH-E-15012025-260259 dated 15.01.2025.