RBI Notifies Sixth Amendment to FEMA (Deposit) Regulations, 2016: SNRR Account Framework Widened to Include IFSC Branches

 

Introduction

The Reserve Bank of India, vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026, has notified the Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026, amending the Foreign Exchange Management (Deposit) Regulations, 2016 (Notification No. FEMA 5(R)/2016-RB dated April 1, 2016). The amendment is issued in exercise of powers conferred under sub-section (2) of Section 6 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999.

The amendment will come into force from the date of its publication in the Official Gazette, and primarily reworks the regulatory framework governing Special Non-Resident Rupee (SNRR) Accounts under Schedule 4 of the principal regulations, while also introducing related changes to Schedules 1 and 3.

Key Amendments

1. Insertion of Definition of "IFSC"

A new clause (v-a) has been inserted in Regulation 2 of the principal regulations, defining "International Financial Services Centre" or "IFSC" with the same meaning assigned to it under clause (g) of Section 3 of the International Financial Services Centres Authority Act, 2019.

This insertion is foundational to the subsequent substantive changes, as it formally brings IFSC-based banking operations within the ambit of the Deposit Regulations.

2. SNRR Accounts Now Permitted Through AD Branches in IFSC

Sub-regulation (4) of Regulation 5 has been substituted to permit any person resident outside India to open, hold, and maintain an SNRR account with an authorised dealer (AD) in India, or its branch outside India — explicitly including a branch located in an IFSC in India.

Correspondingly, paragraph 1 of Schedule 4 has also been substituted to reflect this expanded scope, allowing SNRR accounts to be opened with an AD or its branch outside India (including in an IFSC), for the purpose of putting through permissible current and capital account transactions with persons resident in India, as well as bona fide transactions with persons resident outside India.

This change formally enables IFSC-based banking units to offer SNRR account facilities, supporting the broader policy objective of positioning IFSCs (such as GIFT City) as hubs for cross-border rupee transactions.

3. New Permissible Transfers Between NRO, NRE, and SNRR Accounts

Two related insertions widen the scope of permissible debits and credits:

• Schedule 1, paragraph 3: A new clause (k) has been inserted permitting transfer from an NRO account, within the limit specified under Regulation 4 of the Foreign Exchange Management (Remittance of Assets) Regulations, 2016.
• Schedule 3, paragraph 3(B): A new clause (v) has been inserted permitting transfer to an NRE or SNRR account, within the same prescribed limit under the Remittance of Assets Regulations, 2016.

Read together, these amendments create a clearer, rule-based channel for moving funds between NRO, NRE, and SNRR accounts, subject to the remittance limits already applicable under the extant Remittance of Assets framework.

4. Deletion of Redundant Provisions in Schedule 4

Existing paragraphs 2, 5, 6, 7, and 8 of Schedule 4 have been deleted in their entirety. This represents a consolidation and simplification of the conditions previously governing SNRR accounts, several of which appear to have been superseded by the substituted paragraph 1 and other restructured provisions.

5. Revision of Paragraph 10 — NRO to SNRR Transfers

The existing paragraph 10 of Schedule 4 has been substituted to provide that transfer from an NRO account to an SNRR account shall be governed in accordance with Schedule 3 of the Deposit Regulations, thereby aligning this transfer route with the newly inserted clause (v) discussed above.

6. New Paragraph 16 — Transactions Between Persons Resident Outside India

A new paragraph 16 has been inserted in Schedule 4, addressing transactions between two persons resident outside India routed through SNRR accounts. Where such transactions may not be subject to compliance under the Act or the Rules and Regulations framed thereunder, the AD bank may give effect to them based on instructions or a mandate from the account holder, provided such instructions indicate the underlying purpose of the transfer.

This provision appears intended to facilitate genuine offshore-to-offshore transactions routed through SNRR accounts, while placing the onus of purpose-identification on the account holder's mandate to the AD bank.

Effective Date

The Sixth Amendment Regulations shall come into force from the date of their publication in the Official Gazette.

Legislative History

The principal regulations — Foreign Exchange Management (Deposit) Regulations, 2016 — were originally published vide G.S.R. No. 389(E) dated April 1, 2016, and have since been amended on the following occasions:

• G.S.R. No. 1093(E) dated November 9, 2018
• G.S.R. No. 498(E) dated July 16, 2019
• Notification No. FEMA 5(R)/(3)/2019-RB dated November 13, 2019
• Notification No. FEMA 5(R)/(4)/2024-RB dated May 6, 2024
• Notification No. FEMA 5(R)(5)/2025-RB dated January 14, 2025
• Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026 (present amendment)

Practical Implications

For NRIs, OCIs, foreign portfolio investors, and other persons resident outside India, this amendment effectively widens the operational reach of SNRR accounts by formally enabling their availability through AD branches situated in IFSCs. Entities and individuals routing capital or current account transactions through SNRR accounts — particularly those involving NRO/NRE transfers or offshore-to-offshore transactions — should review the revised Schedule 4 conditions and align internal mandates and documentation accordingly once the amendment is notified in the Official Gazette.

AD banks will also need to update internal SOPs to reflect the deletion of erstwhile paragraphs 2, 5–8, the revised paragraph 10, and the newly inserted paragraph 16 governing purpose-based processing of outside-India SNRR transactions.

RBI Revamps Foreign Exchange Risk Framework for All India Financial Institutions — Fourth Amendment Directions, 2026

Background

The Reserve Bank of India, vide circular RBI/2026-27/161 (DOR.MRG.REC.No.147/21-01-002/2026-27) dated June 24, 2026, issued the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026. These directions amend Paragraph 192 (Section D.4) of the RBI (AIFIs – Prudential Norms on Capital Adequacy) Directions, 2025 dated November 28, 2025, which governs the methodology for computation of Net Open Position (NOP) and calculation of capital charge on foreign exchange risk.

The amendment is aimed at ensuring greater alignment with international standards and consistent implementation across All India Financial Institutions. The revised directions shall come into effect from April 1, 2027.

For reference, All India Financial Institutions covered under these directions include institutions such as EXIM Bank, NABARD, NaBFID, and NHB.

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Scope of Application

Every AIFI is required to compute Net Open Position and maintain capital charge for foreign exchange risk at both the group or consolidated level and the solo or standalone level. The capital requirements for foreign exchange risk are to be met on a continuous basis, that is, at the close of each business day.

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Exclusions from Net Open Position

The directions specify three categories of positions that are excluded from the NOP for the purpose of forex risk capital computation.

First, any position that is deducted from the AIFI's regulatory capital, including a hedging position against such a deducted position, shall not attract forex risk capital requirements.

Second, holdings of capital instruments that are either deducted from capital or risk-weighted at 1250 per cent are excluded. This covers the AIFI's own eligible regulatory capital instruments as well as those of other AIFIs and financial entities, including intangible assets where deducted from capital.

Third, securities that have either already matured and remain unpaid, or have been classified as non-performing assets or investments, are excluded from forex risk capital requirements. Such securities shall attract capital only for credit risk.

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Structural Foreign Exchange Position Exemption

One of the significant additions in the amended framework is the provision for excluding certain structural foreign currency positions from the computation of Net Open Position, on both standalone and consolidated bases.

Structural positions eligible for exclusion include capital investments and accumulated or unremitted surplus in overseas consolidated subsidiaries, joint ventures and associates, overseas branches, IFSC Banking Units, and Offshore Banking Units in Special Economic Zones, where these are denominated in foreign currencies.

An AIFI may exercise this exemption on a case-to-case basis, provided the following conditions are satisfied:

The exclusion is limited to the amount that neutralises the sensitivity of the capital ratio to movements in exchange rates. The exemption must be maintained for a minimum period of six months. The establishment and any changes to a structural foreign exchange position must follow the AIFI's documented risk management policy for structural foreign exchange positions. The exclusionary treatment of the hedge must remain in place consistently for the life of the relevant assets or items. The AIFI must document and make available for supervisory review the positions and amounts excluded from market risk capital requirements.

The directions also clarify that while a matched currency risk position protects an AIFI against exchange rate losses, it does not necessarily protect the capital adequacy ratio. Where the AIFI's capital is denominated in domestic currency and its foreign currency portfolio is perfectly matched, a depreciation of the domestic currency will reduce the capital-to-asset ratio, since risk-weighted assets increase while capital remains unchanged. Holding a structural long position in foreign currency — effectively a short position in domestic currency — can protect the capital adequacy ratio, though it entails a risk of loss if the domestic currency appreciates.

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Calculation of Maximum Structural Exemption

The directions prescribe a methodology for determining the maximum structural foreign exchange position that may be excluded from Net Open Position. The computation involves calculating the additional capital required to maintain the capital ratio unchanged for a one per cent change in the exchange rate. The exemption amount is derived by dividing this incremental capital requirement by one per cent.

An alternative and equivalent method is to multiply the CET1 capital ratio by the forex risk-weighted assets denominated in the relevant foreign currency.

The following operational parameters apply to this calculation:

The CET1 ratio on a quarter-end basis is to be used. Forex RWAs for this purpose include all RWAs denominated in the relevant foreign currency, excluding those already used for forex market risk capital computation under Paragraph 192. As an alternative, an AIFI may include only the credit RWAs in that currency. The structural exemption in any currency is capped at the eligible structural position in that currency. Structural exemptions are to be recalculated on a quarterly basis. The calculation must be performed separately for each foreign currency in which the AIFI seeks an exclusion.

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Computation of Net Open Position

For the purpose of measuring capital requirements for foreign exchange risk, all positions in foreign currencies — including gold — are to be included, whether held in the trading book or the banking book.

The Net Open Position in each currency is calculated by aggregating the following components: the net spot position, being all assets less all liabilities including accrued interest in that currency; the net forward position, covering unsettled tom and spot transactions, forward and futures transactions, and principal on cross-currency swaps and other forex derivatives; guarantees and similar instruments certain to be called and likely to be irrecoverable; net future income or expenses that are certain in amount and have been fully hedged, at the AIFI's discretion; any other items representing profit or loss in foreign currencies; and the net delta-based equivalent of the total book of foreign currency options.

Options are additionally subject to a separately computed capital requirement for gamma and vega risks.

All open positions from onshore and offshore operations are captured in a single NOP calculation. An AIFI is not required to compute separate onshore and offshore NOPs. Overseas operations include overseas branches, IFSC Banking Units, Offshore Banking Units in Special Economic Zones, and overseas subsidiaries, associates, and joint ventures. Capital invested in and accumulated or unremitted surplus of overseas operations are to be included in the NOP based on quarter-end positions.

Derivative positions are to be measured using current spot rates without present value adjustment. For gold, net positions (spot plus forward) are to be expressed in standard units of measurement and valued at current spot rates.

Interest accrued but not yet received, and accrued expenses, are to be treated as spot positions. Unearned future interest and anticipated expenses may be excluded unless the amounts are certain and hedged by the AIFI. Where an AIFI chooses to include future income or expenses, it must do so consistently and may not selectively include only those flows that reduce its position.

Spot rates used for NOP computation under the shorthand method must be sourced from financial benchmarks administered by benchmark administrators authorised under the relevant FMRD directions.

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Capital Charge on Net Open Position

The capital requirement for foreign exchange risk, including gold, is fixed at 9 per cent of the overall Net Open Position computed using the shorthand method. This requirement is in addition to the capital charges applicable for credit risk and interest rate risk on on-balance sheet and off-balance sheet items relating to foreign exchange and gold transactions.

Under the shorthand method, the overall NOP is computed as the higher of the sum of net long positions or the sum of net short positions across all currencies, to which the absolute net position in gold is added.

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Interaction with Master Direction on Risk Management and Inter-Bank Dealings

AIFIs that are also subject to the Master Direction on Risk Management and Inter-Bank Dealings shall continue to be guided by that Direction for matters relating to NOP reporting, applicable limits, and limits specifically applicable to Net Open Positions involving the Indian Rupee as one of the currencies.

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Source: RBI/2026-27/161 | DOR.MRG.REC.No.147/21-01-002/2026-27 | June 24, 2026

PMK Advisors | Compliance. Simplified. 

SEBI Proposes Common Advertisement Code for Specified Regulated Entities

 

Background and Context

The Securities and Exchange Board of India (SEBI) released a Consultation Paper on June 23, 2026, proposing a Common Advertisement Code (CAC) to replace the existing fragmented, entity-specific advertisement frameworks that currently govern regulated entities in the Indian securities market. The CAC is proposed to be embedded in the SEBI (Intermediaries) Regulations, 2008, and would apply uniformly across Stock Brokers, Depository Participants, Investment Advisers, Research Analysts, Online Bond Platform Providers, Portfolio Managers, and Mutual Funds/Asset Management Companies (AMCs).

The existing advertisement regime is characterised by a multiplicity of entity-specific and exchange-specific codes, each with varying requirements, prior approval processes, and reporting mechanisms. This has resulted in regulatory complexity and disproportionate compliance burden for regulated entities. The proposed CAC seeks to address these concerns by establishing a harmonised, principles-based framework that balances ease of doing business with robust investor protection.

Key Proposals under the Common Advertisement Code

a) Transition from Prior Approval to Post-Issue Reporting

One of the most significant departures from the existing framework is the proposed abolition of mandatory prior approval for advertisements. Under the CAC, regulated entities would be required to submit post-issuance reports within 24 hours of publishing an advertisement. This shift is expected to significantly reduce turnaround time and operational bottlenecks, enabling regulated entities to respond more agilely to market developments while maintaining regulatory accountability.

b) Celebrity Endorsements Permitted

The CAC proposes to permit regulated entities to engage celebrities for brand-level or entity-level promotion, subject to prescribed conditions and prior approval. This marks a notable liberalisation from the current position, under which celebrity endorsements have been a contested area. The prior approval requirement specifically for celebrity endorsements is retained as a safeguard, reflecting the heightened potential for investor influence that such endorsements carry.

c) Unified Advertisement Code

All existing entity-specific and exchange-specific advertisement codes are proposed to be replaced by a single CAC. This consolidation is intended to eliminate regulatory fragmentation, reduce the compliance burden on entities operating across multiple segments, and ensure a consistent standard of investor communication across the securities ecosystem.

d) Recognition of PaRRVA Ratings and Rankings

The proposed framework permits regulated entities to advertise ratings and rankings assigned by the Past Risk and Return Verification Agency (PaRRVA), subject to prescribed conditions. The recognition of PaRRVA-assigned ratings in advertisements is envisaged to enable regulated entities to communicate legitimate performance distinctions to investors, while promoting transparency and ensuring adequate safeguards against misleading claims.

e) Greater Clarity on What Constitutes an Advertisement

To remove the ambiguity that has persisted in the existing framework regarding the scope of the term "advertisement", the CAC proposes a revised definition that clearly delineates promotional communications from routine, factual, and investor-service communications. Additionally, an illustrative list of communications that will not be treated as advertisements is proposed, providing regulated entities with greater clarity and predictability in their compliance obligations.

f) Common Reporting Portal

The framework proposes that Supervisory Bodies shall develop digital platforms for advertisement reporting by regulated entities. For entities subject to multiple supervisory bodies, a common platform is envisaged to prevent duplication and streamline compliance. This technology-enabled reporting mechanism is expected to bring operational efficiency and enhance regulatory oversight simultaneously.

Regulatory Significance

The proposed CAC represents a meaningful step in SEBI's ongoing effort to rationalise and modernise the regulatory framework governing the conduct of market intermediaries. The shift from a prior-approval model to a post-issuance reporting regime is consistent with the broader regulatory philosophy of reducing unnecessary process friction while placing greater responsibility on regulated entities to exercise internal compliance oversight. At the same time, the retention of prior approval for celebrity endorsements reflects a calibrated approach that recognises the distinct risks associated with high-visibility promotional activities in the financial services sector.

Practitioners advising Stock Brokers, Depository Participants, Investment Advisers, Research Analysts, Portfolio Managers, Online Bond Platform Providers, and AMCs should note that the final CAC, once notified, will necessitate a review of existing internal advertisement approval processes, compliance calendars, and disclaimers. The revised definition of "advertisement" and the illustrative exclusion list will be particularly relevant in determining the applicability of the code to investor communications, social media content, and educational material.

RBI Exempts Government-Owned NBFC-UL Entities from Governance Directions – Amendment Directions, 2026

 RBI/2026-27/165 | DOR.FIN.REC.No.139/03.10.001/2026-27 | June 24, 2026

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Background

The Reserve Bank of India (RBI) had issued the Reserve Bank of India (Non-Banking Financial Companies – Governance) Directions on November 28, 2025, prescribing comprehensive governance standards for Non-Banking Financial Companies (NBFCs) across the Scale Based Regulatory (SBR) Framework. These Directions were issued under the powers vested in the Reserve Bank under the Reserve Bank of India Act, 1934, the National Housing Bank Act, 1987, and the Factoring Regulation Act, 2011.

The SBR Framework classifies NBFCs into four layers — Base Layer, Middle Layer, Upper Layer, and Top Layer — based on their size, activity, and perceived risk. NBFCs in the Upper Layer (NBFC-UL) are subject to enhanced regulatory and governance requirements, including stringent board composition norms, mandatory committees, and enhanced disclosure obligations, given their systemic significance.

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The Amendment

On June 24, 2026, the RBI issued the Reserve Bank of India (Non-Banking Financial Companies – Governance) Amendment Directions, 2026, effecting a targeted modification to the existing Governance Directions.

The sole amendment inserts a proviso after Paragraph 43 of the principal Directions, reading as follows:

"Provided that these provisions shall not be applicable to NBFC-UL which are fully owned and controlled by Government."

This proviso carves out NBFC-Upper Layer entities that are wholly owned and controlled by the Government of India from the applicability of the governance provisions contained in Paragraph 43 of the Directions.

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Statutory Basis

The Amendment Directions have been issued in exercise of the powers conferred under:

• Sections 45JA, 45K, 45L and 45M of the Reserve Bank of India Act, 1934
• Sections 29A, 30A, 31 and 32 of the National Housing Bank Act, 1987
• Section 3 (read with Section 31A) and Section 6 of the Factoring Regulation Act, 2011

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Effective Date

The Amendment Directions came into force with effect from the date of issuance, i.e., June 24, 2026.

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Regulatory Rationale

The exemption reflects a well-established principle in Indian financial regulation — that entities fully owned and controlled by the sovereign operate under a distinct accountability framework anchored in parliamentary oversight, government audit mechanisms, and public sector governance structures. Applying private-sector-oriented governance mandates on such entities in identical measure may result in regulatory redundancy rather than enhanced prudential outcomes.

This amendment is consistent with similar carve-outs seen across other RBI frameworks, where government-owned financial institutions are treated as a distinct class given the nature of their ownership, mandate, and accountability.

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Key Takeaway

NBFC-UL entities that are fully owned and controlled by the Government are now exempt from the governance provisions under Paragraph 43 of the NBFC Governance Directions, 2025. All other NBFC-UL entities — including those with partial government ownership — continue to remain subject to the full rigour of the Governance Directions.

Compliance teams and boards of privately-held or partially government-owned NBFC-ULs should note that this exemption is narrow in scope and does not extend beyond entities meeting the dual threshold of full ownership and full control by the Government.

RBI Rationalises FEMA Reporting Requirements | A.P. (DIR Series) Circular No. 17 dated June 24, 2026

Introduction

The Reserve Bank of India, vide A.P. (DIR Series) Circular No. 17 dated June 24, 2026 (RBI/2026-27/174), has rationalised certain reporting requirements and prescribed / modified reporting formats under the Foreign Exchange Management Act, 1999 (FEMA). This circular has been issued pursuant to the Foreign Exchange Management (Authorised Persons) Regulations, 2026, and is addressed to all Authorised Persons.

The Master Directions on Money Changing Activities and Reporting under FEMA are being updated separately to reflect the changes introduced by this circular.

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Key Changes Introduced

1. Revised Format of FLM-8

The format of FLM-8 (Statement of purchases and sales of foreign currency notes) has been revised to additionally capture details relating to write-off of foreign currency notes.

Significantly, the requirement of obtaining prior approval of the Reserve Bank for write-off of foreign currency notes exceeding USD 2,000 has been discontinued.

Entities maintaining Nostro accounts and reporting the relevant transactions through FETERS shall not be required to submit FLM-8 returns.

2. Franchisee List Submission

Authorised Persons having franchisee arrangements shall submit a list of such arrangements within 15 days from the end of each calendar quarter.

3. MTSS Sub-Agent List

Indian Agents under the Money Transfer Service Scheme (MTSS) shall submit the list of Sub-Agents on a quarterly basis, within 15 days from the end of each calendar quarter.

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Returns / Instructions Discontinued

The following returns and requirements have been discontinued with immediate effect:

(i) Prescribed formats of registers FLM-1 to FLM-7 under the Master Direction on Reporting under FEMA. However, FFMCs and Non-bank AD Category-II entities shall continue to maintain complete and accurate records of all foreign exchange transactions undertaken by them and shall make such records available to the Reserve Bank for inspection / supervisory purposes, as and when required.

(ii) Return titled "Quarterly Statement showing summation of Foreign Currency Account opened in India out of export proceeds of Foreign Currency Notes / encashed Travellers' Cheques."

(iii) Requirement for submission of a separate List of Additional Locations under MTSS and the requirement of quarterly confirmation regarding the veracity of the list published on the Reserve Bank's website.

(iv) Return relating to Statement of Collateral under MTSS. Indian Agents shall, however, continue to ensure adequacy of collateral in terms of extant instructions.

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Revised Return Format

The Annex to the circular prescribes the revised format of FLM-8, which captures the following:

• Opening Balance
• Purchases — from Public, through Franchisees / FxCs, from AD Banks, from other FFMCs / Non-bank ADs, and Imports
• Sales — to Public, through FxCs, to AD Banks, to other FFMCs / Non-bank ADs, and Exports
• Foreign Currency Notes Written-off
• Closing Balance

The format captures currency-wise data across USD, GBP, EUR, JPY, and other currencies, along with purpose-code-wise purchases / sales to the public during the month.

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Legal Basis

The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to any other permissions / approvals required under any other law.

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Applicability

This circular is applicable to:

• Full Fledged Money Changers (FFMCs)
• Non-bank AD Category-II entities
• Indian Agents under MTSS
• All Authorised Persons under FEMA

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Our View

The rationalisation of FEMA reporting requirements is a welcome step towards reducing compliance burden on Authorised Persons. The discontinuation of FLM-1 to FLM-7 formats and the removal of the prior approval requirement for write-off of foreign currency notes exceeding USD 2,000 are particularly significant reliefs. Entities should, however, note that record-keeping obligations continue unaffected and collateral adequacy requirements under MTSS remain in force.

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Source: RBI A.P. (DIR Series) Circular No. 17 dated June 24, 2026 | RBI/2026-27/174

Disclaimer: This post is for informational purposes only and does not constitute legal or professional advice. Readers are advised to refer to the original circular and consult a professional for specific guidance.

SEBI Board Approves Sweeping Reforms: Transmission of Securities, Buy-back Regulations, AIF Framework and More , Key Decisions from the 214th Board Meeting

 The Securities and Exchange Board of India ("SEBI"), in its 214th Board Meeting held on 19th June, 2026 in Mumbai, approved a wide-ranging set of regulatory reforms covering transmission of securities, buy-back regulations, mutual fund borrowing norms, the Alternative Investment Funds framework, securitised debt instruments, and municipal debt securities, among other matters. A summary of the key decisions is set out below.

1. Simplification and Standardisation of the Framework for Transmission of Securities

With the objective of facilitating faster and easier transmission of securities to legal heirs and claimants of deceased investors, the Board approved comprehensive reforms to the existing transmission framework.

A new category titled Quick Transmission Processing (QTP) has been introduced for small-value claims, namely claims up to ₹10,000 for physical holdings and up to ₹30,000 for dematerialised holdings, enabling such claims to be processed with minimal documentation.

The limits for simplified documentation have been enhanced as follows:

• For physical holdings per listed company: increased from ₹5 lakh to ₹10 lakh
• For dematerialised holdings per beneficial owner: increased from ₹15 lakh to ₹30 lakh

The revised framework further introduces the following process simplifications:

• The requirement of submission of PAN has been removed, considering that PAN is already captured at the time of opening of demat accounts.
• The mandatory requirement of Probate of Will has been done away with, in line with recent amendments to succession laws.
• A combined affidavit-cum-NOC has been permitted in place of separate affidavit and NOC.
• A copy of the death certificate bearing a QR Code has been added as an eligible document, in addition to the original or attested copy, for ease of verification.
• For death certificates issued in foreign jurisdictions, additional modes of verification have been specified through overseas branches of Indian banks or foreign banks having correspondent banking relationships with Indian banks.

These proposals were deliberated with the Industry Standards Forum for Registrars to an Issue and Share Transfer Agents and the Association of Mutual Funds in India, and incorporate feedback received on the consultation paper issued on 12th March, 2026.

2. Re-introduction of Open Market Buy-back through Stock Exchanges and Review of SEBI (Buy-back of Securities) Regulations, 2018

The Board approved amendments to the SEBI (Buy-back of Securities) Regulations, 2018, to re-introduce the open market buy-back route through stock exchanges, in light of the revised taxation framework applicable to buy-backs and feedback received from stakeholders.

Key features of the approved amendments include:

• The open market buy-back route through stock exchanges, in addition to the tender offer route, shall be reintroduced with effect from 1st August, 2026.
• Information regarding open market buy-backs shall be disseminated to shareholders through electronic means, in addition to public announcements through newspaper advertisements.
• The buy-back process shall be completed within 66 working days from the opening of the buy-back, with at least 40% of the earmarked funds to be utilised during the first half of the buy-back period.
• Since promoters are not permitted to participate in open market buy-backs and given the revised taxation framework, such buy-backs shall now be treated as normal trading transactions. Accordingly, the requirement of a separate trading window and display of the company's identity as purchaser on the trading screen has been dispensed with.
• Shares or other specified securities held by promoters or their associates shall remain frozen at the ISIN level during the buy-back period.
• Buy-backs shall be undertaken in compliance with minimum public shareholding requirements.
• The interval between two buy-backs has been aligned with the Companies Act, 2013.
• The appointment of a Merchant Banker has been made discretionary. Where a company elects not to appoint a Merchant Banker, the activities otherwise undertaken by the Merchant Banker shall be discharged by the Company, Compliance Officer, Statutory Auditor, Secretarial Auditor and the Stock Exchanges.

The proposals were deliberated by the Primary Market Advisory Committee (PMAC), with public consultation papers issued on 2nd April, 2026 and 8th May, 2026.

3. Utilisation of Intraday Borrowing by Mutual Funds

The Board approved amendments to the SEBI (Mutual Funds) Regulations, 2026, permitting mutual funds to avail intraday borrowing to manage liquidity mismatches arising during the day, including differences in pay-in/pay-out settlement timings across asset classes, forex settlements, and payments towards mark-to-market of derivative positions, subject to specified safeguards.

This facility is in addition to the borrowing currently permitted up to 20% of net assets of a scheme for the purpose of meeting unitholder payouts such as redemptions. The quantum of intraday borrowing shall be limited to receivables sighted during the day; any borrowing beyond this threshold may be availed solely for meeting unitholder pay-outs as specified under Regulation 42(1) of the SEBI (Mutual Funds) Regulations, 2026.

Asset Management Companies shall be responsible for ensuring that intraday borrowings are repaid by end of day, and that any conversion to overnight borrowing remains within regulatory limits. Intraday borrowings shall not be used as a source of leverage, and AMCs/Trustee Boards are required to maintain adequate documentation and a duly approved policy for utilisation of this facility.

4. Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) Mechanism

In continuation of SEBI's circular dated 30th April, 2026 reducing scheme launch timelines, the Board approved the GARUDA Mechanism through amendment to the SEBI (Alternative Investment Funds) Regulations, 2012.

• For Non-Accredited Investor Schemes (excluding Large Value Funds, AI-only schemes and Angel Funds), the timeline for launch of new schemes has been reduced to 10 working days.
• AI-only schemes and Angel Funds, comprising only Accredited Investors, have been exempted from filing the Private Placement Memorandum through a Merchant Banker, and may launch immediately upon grant of SEBI registration or filing of the PPM with SEBI.

The proposals were deliberated before the Alternative Investment Policy Advisory Committee on 28th April, 2026, with a public consultation paper issued on 11th May, 2026.

5. Transfer of Capacity Building Fund to Section 8 Company for Social Stock Exchange

The Capacity Building Fund (CBF), presently administered by the National Bank for Agriculture and Rural Development (NABARD) for capacity-building initiatives relating to the Social Stock Exchange (SSE), shall now be transferred to the Social Stock Exchange–Capacity Building Foundation (SSE-CBF), a Section 8 company recently incorporated for this purpose. The Board has approved the transfer of the balance amount, along with administration and management of the fund, from NABARD to SSE-CBF.

6. Amendments to SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008

The Board approved amendments to the SDI Regulations with the objective of aligning the framework governing listed securitisation transactions with the RBI's securitisation framework. Key changes include:

• RBI-regulated entities (such as banks and NBFCs) have been exempted from the existing 25% obligor concentration limit applicable at the time of issuance of Securitised Debt Instruments, subject to additional disclosure of concentration risk as a prominent risk factor in the offer document.
• The responsibility for periodic disclosures (such as monthly reports and performance data), presently placed solely on the Originator, has been shifted to the Servicer, recognising that the Servicer is the entity responsible for data collection and reporting.
• For Special Purpose Distinct Entities (SPDEs) where the Originator is an RBI-regulated entity, the Originator's representation on the Board of Trustees has been capped at a maximum of one representative.
• The provision governing transactions between an Originator and SPDE belonging to the same group has been clarified to specify that an SPDE shall not acquire debt or receivables from an Originator that is part of the same group as, or under the same control as, the Trustee.
• SEBI has been empowered to appoint a new trustee in place of an existing trustee whose registration is suspended or cancelled, while retaining SEBI's discretionary power to direct winding up of schemes in exceptional circumstances such as systemic risk or fraud.

These amendments follow the public consultation paper issued on 4th May, 2026, and the recommendations of the Corporate Bonds and Securitization Advisory Committee of SEBI.

7. Amendments to SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015

The Board approved amendments to the ILMDS Regulations aimed at development of the municipal bond market:

• Municipalities have been permitted to raise funds for refinancing of existing project debt, subject to disclosure of existing lenders and loans being refinanced in the offer document or placement memorandum.
• Specific disclosure requirements have been prescribed for fund-raising by two or more municipalities through a pooled finance vehicle, along with operational aspects such as the agreement between the pooled vehicle SPV and constituent municipalities and the escrow account mechanism.
• In line with the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, issuers have been permitted to offer incentives such as additional interest or discount on issue price to senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel, retail individual investors, and such other categories as may be specified by the Board.
• The face value or trading lot for municipal debt securities issued on a private placement basis shall be either ₹1 lakh or ₹10,000, with securities issued at ₹10,000 face value required to have a fixed maturity and no structured obligations.
• Electronic modes have been permitted for advertisements relating to public issues.
• Timelines for post-issue compliances have been extended: unaudited half-yearly financial results from 45 to 60 days from the end of the half year, and audited annual financial results from 60 to 90 days from the end of the financial year.

These proposals follow the public consultation paper issued on 13th May, 2026, and recommendations of the Corporate Bonds and Securitization Advisory Committee of SEBI.

8. Theme for Assessment Proposed by External Experts Advisory Committee (EEAC)

Pursuant to the Union Budget 2025-26 announcement establishing a mechanism to assess the impact of existing regulations, and as guided by the Financial Stability and Development Council and its Sub-Committee, SEBI had constituted the EEAC in December 2025. The Board has approved the theme "Assessment of the framework for SME Capital Raising in Securities Markets" for an evidence-based regulatory review for FY 2026-27.

9. Code of Conduct for Members of SEBI and Amendments to SEBI ESR Regulations

Pursuant to the recommendations of the High-Level Committee (HLC) on conflict of interest, disclosures and related matters concerning Board Members and officials of SEBI — approved by the Board at its meeting held on 23rd March, 2026 — the Board has now approved the Code of Conduct for Members of SEBI, 2026, along with consequential amendments to the SEBI (Employees' Service) Regulations, 2001. The final Code and amendments to the ESR Regulations shall be made available on the SEBI website following due process, including publication of the ESR amendments in the Official Gazette.

Conclusion

The decisions taken at the 214th SEBI Board Meeting reflect a continued focus on ease of doing business, investor protection, and the development of capital markets across multiple segments, ranging from securities transmission and buy-backs to AIFs, securitisation, and municipal debt. Market participants and intermediaries are advised to track the formal notifications and regulatory amendments as they are issued by SEBI in due course.

Source: SEBI Press Release No. 33/2026 dated 19th June, 2026

RBI Mandates Daily Reporting of FCNR (B) Deposits, ECB and OFCB Mobilized under Swap Facility

 A.P. (DIR Series) Circular No. 15, RBI/2026-27/144, dated June 19, 2026

The Reserve Bank of India (RBI) has issued an A.P. (DIR Series) Circular prescribing reporting requirements for Authorised Dealer (AD) Category-I banks in respect of FCNR (B) Deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) mobilized under the Reserve Bank's recently announced Swap Facility.

Background

Attention of AD Category-I banks has been drawn to two earlier circulars issued by the Financial Markets Operations Department (FMOD), both dated June 8, 2026:

• FMOD.MAOG.No.S-56/01.06.016/2026-27 on 'Swap Facility for FCNR (B) Deposits'
• FMOD.MAOG.No.S-57/01.06.016/2026-27 on 'Swap Facility for External Commercial Borrowings and Overseas Foreign Currency Borrowings'

Pursuant to these circulars, RBI has now prescribed the daily reporting mechanism that AD Category-I banks must follow in respect of funds mobilized under the Swap Facility.

Reporting Requirements

1. Daily Submission Timeline — All AD Category-I banks must submit daily data on FCNR (B) deposits, ECBs and OFCBs mobilized under the FMOD circulars, by 6 p.m. every day.

2. Reporting Format and Designated Email IDs

Category	Format	Email ID
FCNR (B) Deposits	Annex I	fedcoepd@rbi.org.in
ECBs	Annex II	ecbframework@rbi.org.in
OFCBs	Annex III	fmrdfx@rbi.org.in

3. NIL Statement Requirement — In case of no transactions during the day, a NIL statement must be submitted. This does not apply on Saturdays and holidays.

4. Backdated Reporting — Data from June 8, 2026 till the date of issuance of this circular shall be submitted along with the first reporting due on June 22, 2026.

Regulatory Basis

The directions have been issued under Sections 10(4), 11(1) and 11(2) of the Foreign Exchange Management Act, 1999 (FEMA), without prejudice to any permissions or approvals required under any other applicable law.

Compliance Action Points for AD Category-I Banks

• Set up internal systems/MIS to capture daily mobilization data under the Swap Facility
• Ensure timely submission to the designated email IDs by 6 p.m. daily, in the prescribed formats
• Build in a NIL-reporting process for non-transaction days (excluding Saturdays/holidays)
• Compile and submit backdated data from June 8, 2026 along with the first reporting cycle due June 22, 2026

Conclusion

Given the same-day (6 p.m.) reporting deadline and the requirement to furnish backdated data by June 22, 2026, AD Category-I banks should prioritise putting the necessary reporting processes in place at the earliest to ensure full compliance.

SEBI Clarifies Applicability of Early Pay-in Benefit in Commodity Derivatives Segment

 Circular No. HO/47/16/13(4)2026-MRD-POD1/I/14266/2026 dated June 19, 2026

The Securities and Exchange Board of India (SEBI) has issued a circular revising the regulatory framework governing the Early Pay-in Facility applicable to the Commodity Derivatives Segment. The amendment clarifies the extent of margin benefits available to market participants who undertake early pay-in of certified goods.

Background

Para 11.3 of Chapter 11 of the SEBI Master Circular for Commodity Derivatives Segment (SEBI/HO/MRD/MRD-PoD-1/P/CIR/2023/136, dated August 04, 2023) prescribes the existing norms governing the Early Pay-in Facility in respect of commodity derivatives contracts.

Pursuant to representations received from stakeholders and detailed deliberations by the Working Group (WG) constituted on the "Review of current regulatory framework of delivery and settlement applicable to Agricultural Commodity Derivatives Segment," along with inputs from the Commodity Derivatives Advisory Committee (CDAC), SEBI has now revised Para 11.3.1 of the Master Circular.

The Revised Provision

Para 11.3.1 of the Master Circular now reads as follows:

"Clearing Corporations shall provide early pay-in facility to market participants permitting them to deposit certified goods to the Clearing Corporation accredited warehouse against relevant derivatives contracts. For such positions against which early pay-in has been made, based on risk perception, Clearing Corporations may exempt imposition of all types of margins. However, Clearing Corporations shall continue to collect mark to market margins from such market participants against such positions."

Key Highlights

1. Scope of the Early Pay-in Facility Clearing Corporations are required to provide an early pay-in facility enabling market participants to deposit certified goods at the Clearing Corporation's accredited warehouse against their relevant derivatives contract positions.

2. Margin Exemption Based on Risk Perception For positions against which early pay-in has been completed, Clearing Corporations are permitted — based on their risk assessment — to exempt such positions from all types of margins otherwise applicable.

3. Continued Applicability of Mark-to-Market Margins Notwithstanding the above exemption, Clearing Corporations are required to continue collecting mark-to-market (MTM) margins from market participants in respect of such positions. This ensures that while upfront margin relief is extended, daily price-risk exposure continues to be monitored and collateralised.

Effective Date

The provisions of this circular shall come into effect from September 21, 2026.

Compliance Obligations for Stock Exchanges and Clearing Corporations

Recognized Stock Exchanges and Clearing Corporations operating a Commodity Derivatives Segment are directed to:

• Make the necessary changes to their systems to give effect to the revised provision;
• Bring the provisions of this circular to the notice of their members; and
• Disseminate the circular on their respective websites.

Regulatory Basis

This circular has been issued by SEBI in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 51 of the Securities Contracts (Regulation) (Stock Exchange and Clearing Corporations) Regulations, 2018, with the objective of protecting the interests of investors in securities and promoting the development and regulation of the securities market.

Conclusion

This clarification provides much-needed certainty to market participants and Clearing Corporations regarding the treatment of margins on positions backed by early pay-in of certified goods. By allowing risk-based exemption of margins other than MTM margins, SEBI seeks to incentivise early delivery and reduce the cost of carrying positions for participants who proactively settle their obligations, while ensuring that price-risk monitoring through MTM margins remains uninterrupted.

Stock Exchanges and Clearing Corporations are advised to undertake the requisite system and process changes well in advance of the September 21, 2026 effective date to ensure smooth implementation.

Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Amendment Directions, 2026 — Agency Business and Referral Services Framework Overhauled

 Introduction

The Reserve Bank of India has notified the Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Amendment Directions, 2026 vide circular

DOR.RAUG.AUT.REC.No.106/24.01.041/2026-27 dated 15th June, 2026. The Amendment Directions have been issued in exercise of powers conferred under Section 35A of the Banking Regulation Act, 1949 and will come into effect on 1st January, 2027.

The amendments modify the Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Directions, 2025 (Master Direction) with the stated objective of reviewing and rationalising the regulatory framework governing agency business and referral services undertaken by Payments Banks. Simultaneously, customer service and conduct-related instructions are being consolidated into the separate Reserve Bank of India (Payments Banks – Responsible Business Conduct) Directions, 2025.

Background

Payments Banks, by their design, operate with restrictions on lending and deposit-taking but are permitted to distribute third-party financial products to their customer base. Given the wide reach of Payments Banks — particularly in semi-urban and rural geographies — the agency and referral channels through which they distribute insurance, mutual fund, and pension products carry significant consumer protection implications. The present amendment sharpens the definitional and operational framework governing these activities.

Key Amendments

1. Revised and New Definitions (Paragraph 4 of the Master Direction)

The Amendment Directions substitute and supplement the existing definitions in paragraph 4 of the Master Direction as follows.

Agency Business has been redefined as an arrangement under which a bank acts as an agent of a Third-Party Product or Service Provider (TPPSP) without risk participation, to facilitate the sale of the latter's financial products or services — such as insurance, mutual fund, or pension products — to its own customers. The activities covered under agency business may include marketing, sales, promotion, initial point of contact for grievance redressal, and other after-sale services related to the product or service.

Referral Services has been redefined as an arrangement under which a bank refers its customers to a TPPSP by making available information about the financial products or services offered by the TPPSP. Importantly, the revised definition clarifies that Referral Services cover only those third-party products or services where continued customer interactions — such as distribution, grievance redressal, and post-sales services — are not undertaken by the bank.

Three new definitions have been inserted after the existing sub-paragraphs. Regulated Financial Products and Services are defined as financial products and services falling under the regulatory framework of RBI, SEBI, IRDAI, PFRDA, or Overseas Regulatory Authorities including IFSCA. Third-Party Product and Service (TPPS) is defined by reference to the Reserve Bank of India (Payments Banks – Responsible Business Conduct) Directions, 2025. Third-Party Product and Service Provider (TPPSP) is defined as an entity that has entered into an agency business or referral arrangement with a bank to offer its product or service to the bank's customers.

2. Omission of Paragraphs 7 and 8

Paragraphs 7 and 8 of the Master Direction have been omitted in their entirety. The regulatory instructions previously covered therein relating to customer service and conduct aspects are being subsumed into the Responsible Business Conduct Directions, 2025, as part of the ongoing consolidation exercise.

3. Revised Framework for Agency Business (Paragraph 12)

Paragraph 12 of the Master Direction has been substituted with a revised framework governing the conduct of agency business by Payments Banks. The key conditions are as follows.

Banks shall deal only in regulated financial products and services in which a bank is permitted to deal under sub-sections (a) to (m) and (o) of Section 6(1) of the Banking Regulation Act, 1949. Only such TPPS covered under the arrangement shall be listed or displayed on websites, mobile applications, or any other digital banking channels offered by the bank.

Banks shall ensure full compliance with the Reserve Bank of India (Payments Banks – Responsible Business Conduct) Directions, 2025 in the conduct of agency business.

Agency business shall be undertaken on a fee basis without any risk participation by the bank. This shall be explicitly disclosed upfront to customers.

Banks shall ensure that the TPPSP whose products are being sold has robust customer grievance redressal arrangements in place, and the bank may facilitate the redressal of grievances on behalf of customers.

4. Omission of Paragraphs 13 to 15

Paragraphs 13, 14, and 15 of the Master Direction have been omitted. As with paragraphs 7 and 8, the relevant customer service and conduct-related instructions are being migrated to the Responsible Business Conduct Directions, 2025.

5. Revised Framework for Referral Services (Paragraph 16)

Paragraph 16 of the Master Direction has been substituted with a revised and more detailed framework for referral services. The conditions prescribed are as follows.

Banks shall comply with the Reserve Bank of India (Payments Banks – Responsible Business Conduct) Directions, 2025 in the conduct of referral services.

The role of the bank under the referral arrangement must be purely referral in nature. Banks may market and refer TPPS to their customers but shall not sell under a referral arrangement. This distinction must be made explicitly clear to customers upfront through a disclaimer.

The name or brand of the bank shall not feature in any of the product or service documents relating to the referred TPPS.

The list of TPPS under the referral arrangement of a bank shall be published on its website, mobile application, and any other digital banking channels to ensure transparency.

No processes relating to TPPS shall be integrated with the bank's platform or carried out within the bank's premises — unless specifically permitted — nor shall they be accessible in the form of a micro-site or micro-application. The only permissible integration is an access link to redirect the customer to the TPPSP's own platform.

The selection of the TPPSP shall be undertaken with proper due diligence to manage the reputational risks to which the bank may be exposed. The bank shall ensure that the TPPSP has robust customer grievance redressal arrangements in place.

Effective Date

The Amendment Directions shall come into effect on 1st January, 2027, giving Payments Banks approximately six months to align their existing agency and referral arrangements, update customer disclosures, revise digital channel configurations, and undertake necessary due diligence on TPPSPs.

Significance and Compliance Implications

The amendment draws a clear regulatory line between agency business — where the bank actively participates in distribution and after-sale servicing — and referral services — where the bank's role ends at directing the customer to the TPPSP. This distinction has important implications for how Payments Banks structure their product partnerships, configure their digital platforms, and frame customer-facing communications.

The prohibition on brand co-mingling in referral arrangements and the bar on platform integration beyond a redirect link are particularly significant for Payments Banks with large digital customer bases, where the line between referral and distribution can easily blur. Banks will need to conduct a thorough review of their existing TPPSP arrangements to determine whether they qualify as agency business or referral services under the revised definitions, and ensure that the corresponding compliance frameworks are in place before the effective date.

The consolidation of customer service and conduct norms into the Responsible Business Conduct Directions, 2025 is also a notable structural development, as it signals RBI's intent to maintain a clean separation between product distribution rules and conduct obligations for Payments Banks.

Conclusion

Payments Banks operating agency business and referral arrangements should treat the 1st January, 2027 deadline as a firm compliance milestone. The immediate priorities include reclassifying existing TPPSP arrangements under the revised definitions, updating digital channels and disclosures, reviewing platform integrations for referral services, and formalising due diligence frameworks for TPPSP onboarding.

Immigration and Foreigners (Amendment) Order, 2026 — MHA Amends Protected Area Regime and OCI Cardholder Definition

Introduction

The Ministry of Home Affairs (MHA), in exercise of powers conferred by Section 7 read with Sections 3 and 11 of the Immigration and Foreigners Act, 2025 (13 of 2025), has notified the Immigration and Foreigners (Amendment) Order, 2026 vide S.O. 3216(E) dated 18th June, 2026. The amendment modifies the Immigration and Foreigners Order, 2025 — the principal order published vide S.O. 3986(E) dated 1st September, 2025 — on three substantive counts: a new definition, a permit-related insertion, and a revision of the Protected Area Schedule for Rajasthan.

Key Amendments

1. Definition of "Overseas Citizen of India Cardholder" Inserted

A new clause (aa) has been inserted in paragraph 2, sub-paragraph (1), after clause (a) of the principal Order. The clause defines "Overseas Citizen of India Cardholder" as the Overseas Citizen of India Cardholder as defined under clause (ee) of sub-section (1) of Section 2 of the Citizenship Act, 1955 (57 of 1955).

This definitional clarity is significant for the administration of immigration and foreigner-related permissions, as OCI Cardholders enjoy a distinct legal status under Indian law and are subject to different entry, stay, and permit conditions compared to other foreign nationals.

2. Amendment to Paragraph 14 — Permit Requirement

In paragraph 14, sub-paragraph (2) of the principal Order, after the words "after obtaining necessary permit", the words "or without permit, as the case may be," have been inserted. This insertion acknowledges that travel to or through certain regulated zones may be permissible without a separate permit in specific circumstances, bringing greater operational clarity to the permit framework for restricted and protected areas.

3. Revision of the Third Schedule — Protected Areas in Rajasthan

The most operationally significant amendment relates to the Third Schedule (Appendix) of the principal Order, under the heading "RAJASTHAN". The entries specifying protected area tehsils across multiple Rajasthan districts have been substituted. The revised Schedule covers the following districts and tehsils:

District: Jaisalmer — Tehsils: Pokaran (area west of NH-11), Jaisalmer (area west of NH-11 and NH-68), Ramgarh (entire tehsil), Sam (entire tehsil), Fatehgarh (area west of NH-68).

District: Bikaner — Tehsils: Khajuwala, Chhatargarh, Poogal, Bajju (entire areas), Lunkaransar (area west of NH-62, including Mahajan Field Firing Range).

District: Sriganganagar — Tehsils: Sriganganagar (west of NH-62), Srikaranpur (entire tehsil), Padampur (west of NH-62), Gajsinghpur, Raisinghnagar, Anupgarh, Gharsana, Rawla, Srivijaynagar (entire tehsils), Suratgarh (west of NH-62).

District: Barmer — Tehsils: Sedwa, Dhanau, Chohtan, Ramsar, Gadraroad (entire tehsils), Sheo (west of NH-68).

District: Phalodi — Tehsils: Bap (west of NH-11), Phalodi (west of NH-11).

District: Jalore — Blocks: Sanchore and Chitalwana under Jalore Tehsil.

Exclusions from Protected Area Designation

The amended Schedule explicitly carves out the following areas from the protected area regime, notwithstanding their geographic location within the above tehsils:

The peripheral areas of cities, towns, and villages situated on National Highway Nos. 62, 11, and 68 through which these highways pass.

The city limits of Sriganganagar, Suratgarh, Bikaner, Phalodi, Bap, Pokaran, Jaisalmer, Barmer, and Sanchore.

Villages and areas of tourist interest in Jaisalmer district — including Amarsagar, Ludrava, Kuldara, Bada Bagh (Black Bar), Akal, Sam, Unda, and Khuhri — used for desert safaris, camping sites, desert rallies, and similar tourism purposes, extending 500 metres on either side of roads leading to these places and boundaries of such villages.

Effective Date

The Amendment Order comes into force on the date of its publication in the Official Gazette, i.e., 18th June, 2026.

Significance

The Protected Area Permit (PAP) regime under the Immigration and Foreigners framework restricts entry of foreign nationals — including OCI Cardholders in certain cases — into sensitive border areas without prior government permission. The revised Schedule for Rajasthan brings granular geographic clarity to which tehsils and sub-areas along the India-Pakistan border fall within the protected zone, while preserving access to highway corridors and key tourist destinations. The explicit exclusions for tourism zones reflect a calibrated policy approach — balancing national security imperatives with the operational needs of Rajasthan's desert tourism economy.

The insertion of the OCI Cardholder definition and the permit flexibility clause in paragraph 14 further streamlines the legal framework for administering foreigner movements in regulated zones.

Conclusion

Businesses, hospitality operators, and immigration practitioners dealing with foreign national travel to Rajasthan's border districts should review the revised Schedule to assess whether specific locations fall within or outside the updated protected area designation. OCI Cardholders and their employers should also note the formal definitional anchoring of OCI status within the Order's framework.

RBI Notifies Amendments to FEMA (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2026

The Reserve Bank of India, vide Notification No. FEMA.395(4)/2026-RB dated June 13, 2026, has amended the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, refining the payment mechanics applicable to NRI/OCI investments on a repatriation basis and to equity shares of Indian companies listed on International Exchanges, while also updating the reporting framework for Authorised Dealer banks.

Background

The amendment has been issued in exercise of powers conferred under Section 47 of the Foreign Exchange Management Act, 1999, and modifies the Principal Regulations notified vide Notification No. FEMA.395/2019-RB dated October 17, 2019 (G.S.R. No. 795(E) dated October 17, 2019). The Principal Regulations have previously been amended on three occasions — in 2020, 2024, and January 2025 — and this notification represents the fourth amendment in the series. The Regulations come into force from the date of their publication in the Official Gazette.

Amendment to Schedule III: Investments by Individuals Resident Outside India

Schedule III of Regulation 3.1 governs investments by an individual person resident outside India, including Non-Resident Indians (NRIs) or Overseas Citizens of India (OCIs), made on a repatriation basis. The amended provision clarifies the mode of payment and remittance of sale proceeds as follows.

On the payment side, the amount of consideration must be paid either as an inward remittance from abroad through banking channels, or out of funds held in a repatriable deposit account maintained under the Foreign Exchange Management (Deposit) Regulations, 2016. Significantly, the amendment introduces a requirement that an individual person resident outside India must designate a specific repatriable rupee account, maintained under the 2016 Deposit Regulations, to be used exclusively for investments permitted under this Schedule. Separately, for subscription to the National Pension System (NPS) by NRIs/OCIs, payment may be made via inward remittance from abroad, or from a repatriable foreign currency account, rupee account, or NRO account maintained under the 2016 Deposit Regulations.

On the remittance of sale proceeds, the amendment retains the position that sale proceeds (net of taxes) of equity instruments may either be remitted outside India or credited to the designated rupee account of the investor. For sale proceeds of mutual fund units and NPS subscriptions by NRIs/OCIs, the investor now has the option to either remit the proceeds outside India or credit them to any account maintained under the 2016 Deposit Regulations.

Amendment to Schedule XI: Purchase of Equity Shares on International Exchanges

Schedule XI governs the purchase or subscription of equity shares of companies incorporated in India that are listed on an International Exchange, under the permissible holder framework. The amended provision specifies that the consideration for such purchase or subscription may be paid either through banking channels to a foreign currency account of the Indian company, maintained under the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015, or as an inward remittance from abroad through banking channels, or out of funds held in a repatriable foreign currency or rupee account maintained under the 2016 Deposit Regulations.

The amendment also adds an explanation clarifying that the proceeds of such purchase or subscription must either be remitted to a bank account in India or deposited in the Indian company's foreign currency account under the 2015 Regulations. On the sale side, sale proceeds (net of taxes) of the equity shares may be remitted outside India or credited to the bank account of the permissible holder, maintained under the 2016 Deposit Regulations.

Amendment to Reporting Requirements under Regulation 4

Sub-regulation (9) of Regulation 4, which deals with the LEC (Individual Foreign Investor) reporting form, has also been substituted. Under the amended provision, designated Authorised Dealer Category-I banks are required to report to the Reserve Bank, in Form LEC (IFI), the purchase or transfer of equity instruments by an individual person resident outside India — including NRIs or OCIs — on stock exchanges in India.

Conclusion

This amendment streamlines and consolidates the payment and remittance mechanics applicable to repatriable investments by NRIs and OCIs, while also formalising the payment route for equity shares of Indian companies listed on International Exchanges under the permissible holder scheme. The accompanying update to the LEC (IFI) reporting requirement reinforces the reporting discipline expected of AD Category-I banks in respect of secondary market transactions by individual foreign investors. Entities and individuals dealing in non-debt instrument investments from outside India should review their existing account structures and remittance arrangements to ensure alignment with the amended Schedules.

Compliance. Simplified. — PMK Advisors

SEBI Issues Guidelines for Winding Up of AIFs: Retention of Proceeds and 'Inoperative Fund' Status

The Securities and Exchange Board of India (SEBI), vide Circular No. HO/19/34/11(2)2026-AFD-POD1/I/13764/2026 dated June 16, 2026, has specified detailed guidelines for the winding up of Alternative Investment Funds (AIFs), addressing two critical aspects: retention of proceeds beyond the permissible fund life, and the introduction of an 'Inoperative Fund' status as an interim arrangement before surrender of registration.

Background

The SEBI (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations") were amended and notified on April 18, 2026, to provide AIFs greater flexibility with respect to winding up of their schemes and surrender of registration. Regulation 29 of the AIF Regulations deals with winding up, and three sub-provisions are of particular relevance here:

Regulation 29(7) requires that within the liquidation period, assets be liquidated and proceeds distributed to investors after satisfying all liabilities, subject to conditions specified by SEBI from time to time.

Regulation 29(10A) enables an AIF to be tagged as an 'Inoperative Fund', subject to conditions specified by SEBI.

Regulation 29(11) requires surrender of the certificate of registration upon winding up of the AIF.

The present circular operationalises these provisions by specifying the conditions and modalities for retention of proceeds, the process for obtaining Inoperative Fund status, and the surrender of registration.

Conditions for Retention of Proceeds Beyond Permissible Fund Life

AIFs and schemes of AIFs may now retain liquidation proceeds beyond the liquidation period or dissolution period (referred to as "permissible fund life"), provided at least one of the following three conditions is satisfied.

First, the AIF/scheme must have demonstrable receipt of a litigation notice or demand. SEBI has clarified that this is intentionally broad in scope, covering any official written communication from a tax authority, regulatory authority, law enforcement agency, court of law, or from an investor/counterparty, indicating a potential tax, regulatory, or legal liability. This explicitly includes show-cause notices, re-assessment notices, and investigation summons, and is not restricted to crystallised demand notices.

Second, where proceeds are proposed to be retained for anticipated liabilities arising from a possible or probable litigation or tax demand, the manager must obtain consent from at least 75% of investors by value of their investment in the scheme. In such cases, the manager is required to disclose to investors the amount being retained and the estimated retention period at the time of seeking consent.

Third, amounts retained to meet residual winding-up related operational expenses must be substantiated through invoices, supporting documents, or records of comparable expenses incurred in previous years. Retention on this ground is capped at three years from the end of the permissible fund life. The Standard Setting Forum of AIFs (SFA), in consultation with SEBI, will formulate implementation standards to standardise the operational heads under which such monies may be retained.

All monies retained under any of these three grounds must be invested in accordance with Regulation 15(1)(f) of the AIF Regulations. Once liabilities are satisfied and retained monies distributed to investors, the scheme stands wound up under Regulation 29.

Applying for 'Inoperative Fund' Status

An AIF with one or more schemes holding retained monies, and intending to eventually surrender its registration, may apply for Inoperative Fund status in the format specified at Annexure A of the circular, by emailing inoperativeaif@sebi.gov.in. Notably, an AIF that has not retained any monies but wishes to continue holding its registration purely in anticipation of a favourable outcome in pending litigation may also apply under this route.

Once SEBI approves the application, the AIF is tagged as an Inoperative Fund. Such a fund may apply for surrender of its certificate of registration only after liabilities are satisfied and retained monies are distributed to investors across all its schemes.

Regulatory Framework for Inoperative Funds

From the date of obtaining the Inoperative Fund tag, three conditions apply: retained monies must continue to be invested per Regulation 15(1)(f); no new scheme may be launched under the AIF; and no management fees may be charged on any scheme.

In exchange, SEBI has granted relief from several recurring compliance requirements, as detailed in Annexure B of the circular. These include the Limited Quarterly Activity Report and Annual Activity Report, audit of PPM terms, intimation of PPM changes, the Compliance Test Report, reporting to Benchmarking Agencies, NISM certification for the key investment team, the requirement of a custodian for safekeeping of securities, periodic disclosure to investors on fund investments, annual/quarterly investor reporting, and valuation requirements under Regulation 23(2) and 23(3). The effective date of non-applicability varies by requirement — some apply from the date of obtaining Inoperative Fund status, others from the subsequent financial year or quarter, as specified in the Annexure.

Annual Reporting Obligation

AIFs with retained monies under paragraph 3 of the circular, as well as those tagged as Inoperative Funds, must submit an Annual Status Report on retained monies and outstanding liabilities — to both SEBI and investors of the relevant scheme(s) — in the format prescribed at Annexure C. This report must be filed on the SEBI Intermediary Portal within 30 calendar days from the end of March of every financial year, and must continue until all liabilities are resolved and a NIL bank balance is achieved.

Applicability to Erstwhile Venture Capital Funds

The entire framework — retention of proceeds and Inoperative Fund status — extends equally to Venture Capital Funds registered under the erstwhile SEBI (Venture Capital Funds) Regulations, 1996, with the same regulatory conditions applicable as for AIFs.

Effective Date and Legal Basis

The circular takes effect immediately and has been issued under Section 11(1) of the SEBI Act, 1992, read with Regulation 29 and Regulation 36 of the AIF Regulations. The SEBI Master Circular for AIFs dated June 03, 2026 has been correspondingly updated to incorporate these provisions.

Conclusion

This circular addresses a long-standing operational challenge for fund managers , funds that have completed their investment lifecycle but remain unable to wind up due to pending or anticipated contingent liabilities. By formalising a structured retention mechanism and an Inoperative Fund status with corresponding compliance relief, SEBI has provided a workable middle path between full operational status and outright surrender of registration, while preserving accountability through annual reporting until final closure.

Compliance. Simplified. — PMK Advisors