RBI Updates Foreign Exchange Payment Regulations for ACU Member Countries

Introduction

The Reserve Bank of India (RBI) has introduced amendments to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2025, updating the existing framework outlined in the 2023 regulations under the Foreign Exchange Management Act, 1999 (FEMA). This amendment, effective upon publication in the Official Gazette, clarifies payment processes between Asian Clearing Union (ACU) member countries, excluding Nepal and Bhutan.

Key Changes in the Amendments

Effective Date

• These regulations will come into effect immediately following their publication in the Official Gazette.

Amendment to Regulation 3

• The significant alteration is found in Regulation 3 of the Principal Regulations. The changes are as follows:

1. In sub-regulation (2), clause (I), sub-clause (a):
   • The existing item (ii) and its proviso are replaced with:
     • “(ii) Member countries of ACU, other than Nepal and Bhutan – Regarding payments from a resident in one participant country to a resident in another participant country, the ACU mechanism can be utilized, or transactions shall comply with the directives provided by the Reserve Bank to authorized dealers periodically. For all other transactions, receipt and payment will adhere to the procedures specified in sub-clause (iii).”

Conclusion

The amendments to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2025, aim to streamline processes related to foreign exchange transactions and enhance clarity for authorized dealers. Staying informed of these regulatory changes is vital for all stakeholders involved in international transactions.