RBI Unveils Measures to Facilitate Cross-Border Trade Transactions

In a move that strengthens regional financial cooperation, the Reserve Bank of India (RBI) has allowed Indian banks and their overseas branches to extend loans in Indian Rupees (INR) to individuals and institutions based in Bhutan, Nepal, and Sri Lanka, as per the news reports. 

The step is aimed at facilitating cross-border trade and deepening economic ties with neighbouring nations while promoting the use of the Indian Rupee in international transactions.

RBI’s Policy Move to Strengthen Regional Trade

According to the RBI, the decision aligns with its ongoing efforts to simplify external trade and payment processes under the Foreign Exchange Management framework. The regulator has introduced key amendments to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, and the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015.

“AD (authorised dealer) banks in India and their overseas branches have been permitted to lend in Indian Rupees to persons resident in Bhutan, Nepal, and Sri Lanka, including banks in these jurisdictions, to facilitate cross-border trade transactions,” the RBI said, as per the news reports 

Eased Rules on Exporter Accounts and Repatriation Timeline

The central bank has also provided relief to Indian exporters by extending the repatriation period for unutilised balances in foreign currency accounts. Previously, exporters were required to bring back unused funds by the end of the month following the date of realisation.

Now, the RBI has increased this period to three months for accounts maintained with banks located in the International Financial Services Centre (IFSC) within India. This move is designed to offer exporters greater operational flexibility while ensuring compliance with India’s foreign exchange management framework.

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Conclusion

By enabling rupee-denominated lending to neighbouring countries and extending flexibility to exporters, the RBI has taken another step toward regional financial stability and trade facilitation.

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