RBI Notifies Foreign Exchange Management (Guarantees) Regulations, 2026

The Reserve Bank of India (RBI) has issued the Foreign Exchange Management (Guarantees) Regulations, 2026. The regulations apply to guarantees where any party is a person resident outside India.

Authorised dealer (AD) banks have been directed to follow these regulations while facilitating such guarantees. The RBI has also instructed AD banks to ensure compliance with related regulatory guidelines issued by its Department of Regulation.

Scope And Applicability of The New Regulations

The FEMA (Guarantees) Regulations, 2026 provide a consolidated framework governing guarantees involving non‑residents. Authorised dealer banks are required to be guided by these regulations when issuing, modifying, or invoking guarantees.

The RBI clarified that compliance with other applicable regulatory guidelines remains mandatory. The regulations are intended to standardise processes across banks handling foreign exchange guarantees.

Comprehensive Reporting Requirements Introduced

The regulations mandate comprehensive reporting of all guarantees issued, modified, or invoked. Such reporting is to be submitted to authorised dealer banks in Form GRN, as annexed to the regulations.

This reporting framework applies to all relevant guarantee transactions without exception. The RBI stated that detailed instructions on how authorised dealer banks should compile and submit these returns will be communicated separately.

Discontinuation Of Trade Credit Guarantee Reporting

With the issuance of the new regulations, quarterly reporting on issuance of guarantees for Trade Credit will be discontinued. The discontinuation will apply from the quarter ending March 2026.

This change alters the existing reporting frequency applicable to Trade Credit guarantees. The move aligns reporting requirements under guarantees within a unified regulatory structure.

Responsibilities Of Authorised Dealer Banks

Authorised dealer banks have been directed to bring the contents of the circular to the notice of their customers and constituents. Banks are expected to implement the regulatory changes in line with the updated framework.

Compliance with Department of Regulation guidelines issued by the RBI continues to be required. The RBI highlighted the role of AD banks in ensuring accurate reporting and adherence.

Read More: List of 35 NBFCs Whose Registration Was Cancelled by the RBI.

Conclusion

The RBI’s notification of the Foreign Exchange Management (Guarantees) Regulations, 2026 introduces a unified regulatory and reporting framework for guarantees involving non‑residents. The regulations streamline reporting requirements while discontinuing quarterly Trade Credit guarantee reporting from March 2026.

Existing circulars are being superseded, and multiple Master Directions have been amended. Authorised dealer banks are required to ensure implementation and customer awareness under the revised framework.

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