Executive Summary:
This notification, titled the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, is issued by the Reserve Bank of India (RBI) and supersedes Notification No. FEMA 14R2016RB dated May 02, 2016. It establishes regulations for how residents in India can make and receive payments from individuals outside India, effective from the date of its publication in the Official Gazette (December 21, 2023). It has been amended up to February 12, 2025.
Key Points / Main Content:
General Provisions:
* No person resident in India shall make or receive payment from a person resident outside India except as provided in the Foreign Exchange Management Act, 1999 (FEMA) and its rules/regulations/directions.
* The Reserve Bank may permit a resident to make or receive payment under the Act upon application.
* Receipts and payments between residents in India and those outside India must be made through an Authorised Bank or Authorised Person unless otherwise provided.
Trade Transactions:
* Receipts/payments for exports to or imports from Nepal and Bhutan can be in Indian Rupees. However, exports to Nepal can be received in foreign currency if the importer is permitted by the Nepal Rashtra Bank.
* Transactions with member countries of the ACU (excluding Nepal and Bhutan) can be made through the ACU mechanism or as directed by the RBI to authorised dealers. All other transactions can be made as specified for countries other than ACU members.
* Transactions with countries other than ACU member countries can be made in Indian Rupees or any foreign currency.
* Receipts and payments can be made as per the extant Foreign Trade Policy framed by the Central Government, irrespective of the above sub-regulations.
Non-Trade Transactions:
* Receipts/payments for non-trade transactions with Nepal and Bhutan can be in Indian Rupees. Payments for overseas investment in Bhutan can also be made in foreign currency.
* Receipts/payments for non-trade transactions with other countries can be in Indian Rupees or any foreign currency.
Other Provisions:
* Current account transactions (other than trade) between a resident in India and a person resident outside India visiting India can only be made in Indian Rupees.
* Payments/receipts under regulation 3 can be made by debit/credit to a bank account maintained as per FEMA rules, regulations, or directions.
Impact Analysis:
Residents in India:
Impact: Residents are governed by specific regulations regarding how they can make and receive payments to/from individuals outside India, impacting trade and other financial transactions.
Action Required: Ensure all cross-border transactions comply with these regulations, utilizing authorized banking channels and permissible currencies. Apply to the RBI for exemptions if needed.
Authorised Banks/Authorised Persons:
Impact: These entities serve as the primary channel for cross-border transactions and must ensure compliance with the specified regulations.
Action Required: Implement necessary systems and controls to facilitate transactions in accordance with the new regulations and any RBI directives.
Central Government:
Impact: The Foreign Trade Policy framed by the Central Government has implications for cross-border payments and receipts.
Action Required: Ensure alignment between the Foreign Trade Policy and these Foreign Exchange Management Regulations.
Key Entities Referenced
Foreign Exchange Management Act, 1999: The primary legislation authorizing the regulations outlined in the document. (42 of 1999)
Foreign Exchange Management Manner of Receipt and Payment Regulations, 2023: The title of the regulation being established and amended.
Reserve Bank of India: The central bank of India, responsible for issuing and regulating foreign exchange matters.
Nepal: A country with specific provisions for trade and other transactions outlined in the regulations.
Bhutan: A country with specific provisions for trade and other transactions outlined in the regulations.
Asian Clearing Union: A payment arrangement involving multiple countries, with specific transaction rules defined in the document. (ACU)
Foreign Trade Policy: A policy framed by the Central Government of India, that can influence receipts and payments.
Authorised Bank: Entities permitted to handle foreign exchange transactions under the regulations, as defined in the Foreign Exchange Management Deposit Regulations, 2016.
RESERVE BANK OF INDIA
(FOREIGN EXCHANGE DEPARTMENT)
CENTRAL OFFICE
MUMBAI 400 001
No. FEMA 14(R)/2023-RB December 21, 2023
(Amended up to February 12, 2025)
Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023
In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act,
1999 (42 of 1999) and in supersession of Notification No. FEMA 14(R)/2016-RB dated May 02,
2016, except as respects things done or omitted to be done before such supersession, the
Reserve Bank makes the following regulations, namely:
1. Short title and commencement. - (1) These regulations shall be called the Foreign Exchange
Management (Manner of Receipt and Payment) Regulations, 2023.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Definitions. - (1) In these regulations, unless the context otherwise requires,-
i. 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
ii. 'Authorised Bank' shall have the same meaning as given in the Foreign Exchange
Management (Deposit) Regulations, 2016 as amended from time to time.
(2) The words and expressions used but not defined in these regulations shall have the same
meanings respectively assigned to them in the Act.
3. Manner of receipt and payment. – (1) Save as otherwise in a manner as provided in the Act
or the rules or regulations made or directions issued under the Act, no person resident in India
shall make or receive payment from a person resident outside India:
Provided that the Reserve Bank may, on an application made to it, permit a person
resident in India to make or receive payment under the Act.
(2) The receipt and payment between a person resident in India and a person resident outside
India shall, unless provided otherwise, be made through an Authorised Bank or Authorised Person
and in the manner as specified below:
(I) Trade transactions - (a) receipt/payment for export to or import from the countries given below
of eligible goods and services shall be made as under:
(i) Nepal and Bhutan - in Indian Rupees provided that in case of exports from India where the
importer in Nepal has been permitted by the Nepal Rashtra Bank to make payment in foreign
currency, such receipts towards the amount of the export may be in foreign currency;
11[(ii) Member countries of ACU, other than Nepal and Bhutan – In respect of payments from
a resident in the territory of one participant country to a resident in the territory of another
participant country, through ACU mechanism, or as per the directions issued by the Reserve Bank
to authorised dealers from time to time. For all other transactions, receipt and payment may be
made in a manner as specified at (iii) below.]
(iii) Countries other than member countries of ACU - In Indian Rupees or in any foreign
currency.
(b) Notwithstanding anything contained in this sub-regulation, receipts and payments may also
be made in a manner as may be provided in the extant Foreign Trade Policy framed by the Central
Government.
Explanation: The expression ‘ACU’ (Asian Clearing Union) shall have the same meaning
assigned to it under Article I of the ACU agreement and the ACU mechanism shall be construed
accordingly.
(II) Transactions other than trade transactions - receipt and payment shall be made as under:
(i) Nepal and Bhutan - In Indian Rupees provided that in case of overseas investment in Bhutan,
payment may also be made in foreign currency;
(ii) Other Countries – In Indian Rupees or any foreign currency.
(3) Payment and receipt in India for any current account transaction, other than a trade
transaction, between any person resident in India and a person resident outside India, who is on
a visit to India, may be made only in Indian Rupees.
Provided that any payment or receipt under regulation 3 may also be made by debit/ credit to a
bank account maintained in terms of the rules, regulations or directions issued under the Act.
(Dr Aditya Gaiha)
Chief General Manager-in-Charge
1 Prior to its substitution, the item (ii) of sub-clause (a) of clause (I) of sub-regulation (2) of regulation 3 read as follows:
“(ii) Member countries of ACU, other than Nepal and Bhutan - through ACU mechanism or as per the directions issued
by the Reserve Bank to authorised dealer from time to time:
Provided that in case of imports where the goods are shipped to India from a member country of the ACU (other than
Nepal and Bhutan) but the supplier is resident of a country other than a member country of the ACU, the payment may
be made in a manner as specified at (iii) below.”
2The Principal Regulations were published in the Official Gazette vide Notification No. FEMA
14(R)/2023-RB dated December 20, 2023 (published on December 21, 2023) in Part III, Section
4 and subsequently amended, vide following notifications:
(i) Notification no. FEMA 14(R)(1)/2025-RB dated February 10, 2025 (published on
February 11, 2025 in Part III, Section 4 in the Official Gazette)
3