Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026 — Key Changes
The Reserve Bank of India, through its Foreign Exchange Department (Central Office), has issued a notification dated 13th June 2026, amending the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019. The amendment is notified vide No. FEMA. 395(4)/2026-RB and comes into force from the date of its publication in the Official Gazette.
The Principal Regulations were originally published vide G.S.R. No. 795(E) dated 17th October 2019 and have been amended on three prior occasions, the most recent being the Third Amendment Regulations, 2025 dated 15th January 2025.
Amendment to Regulation 3.1 — Schedule III and Schedule XI
The amendment substitutes the existing provisions at Sl. No. III and X of Regulation 3.1, revising the mode of payment and remittance of sale proceeds under two schedules.
Schedule III — Investments by Individual Persons Resident Outside India on Repatriation Basis (NRI/OCI)
The revised Schedule III governs investments by individual persons resident outside India, including Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), on a repatriation basis.
With respect to the mode of payment, the amended regulation provides that the consideration for such investments 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. A repatriable rupee account, maintained in accordance with the said Deposit Regulations, shall be designated by the individual investor and used exclusively for investments permitted under this Schedule. Additionally, subscriptions to the 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 under the Foreign Exchange Management (Deposit) Regulations, 2016.
Regarding remittance of sale proceeds, the net-of-tax sale proceeds of equity instruments may be remitted outside India or credited to the investor's designated rupee account. Sale proceeds of units of mutual funds and NPS subscriptions by NRIs/OCIs may similarly be remitted outside India or credited to any account maintained under the Foreign Exchange Management (Deposit) Regulations, 2016, at the option of the NRI/OCI investor.
Schedule XI — Purchase or Subscription of Equity Shares of Indian Companies on International Exchanges Scheme (Permissible Holder)
The revised Schedule XI governs the purchase or subscription of equity shares of Indian companies listed on an International Exchange by a permissible holder.
The consideration for such purchase or subscription shall be paid either 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, or as inward remittance from abroad through banking channels out of funds held in any repatriable foreign currency or rupee account maintained under the Foreign Exchange Management (Deposit) Regulations, 2016.
An explanation has been added clarifying that the proceeds of purchase or 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 under the Foreign Currency Accounts Regulations, 2015.
With respect to the remittance of sale proceeds, the net-of-tax sale proceeds of equity shares may be remitted outside India or credited to the bank account of the permissible holder maintained under the Foreign Exchange Management (Deposit) Regulations, 2016.
Amendment to Regulation 4 — LEC Reporting for Individual Foreign Investors (IFI)
Sub-regulation (9) of Regulation 4 of the Principal Regulations has been substituted. The revised provision reads as follows:
"LEC (Individual Foreign Investor — IFI): The designated Authorised Dealer Category I banks shall report to the Reserve Bank in Form LEC (IFI) the purchase or 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."
This revision consolidates the LEC (IFI) reporting obligation for AD Category I banks covering all equity instrument transactions by NRIs and OCIs on Indian stock exchanges.
Effective Date
The Amendment Regulations come into force from the date of their publication in the Official Gazette.
Source: Gazette of India Extraordinary, Part III — Section 4 | No. FEMA. 395(4)/2026-RB dated 13th June 2026 |
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