Foreign Exchange Management (Guarantees) Regulations, 2026

On 12th January 2026, the Reserve Bank of India notified the Foreign Exchange Management (Guarantees) Regulations, 2026, laying down a comprehensive framework for guarantees involving persons resident outside India.

Key Points:

New Regulatory Framework: The regulations govern the issuance, modification, and invocation of guarantees involving non-residents under the Foreign Exchange Management framework.
Directions to Banks: All Authorised Dealer (AD) Category-I banks have been directed to comply with the new regulations while facilitating such guarantees and to adhere to guidelines issued by the Department of Regulation.
Mandatory Reporting: AD banks must report all guarantees issued, modified, or invoked in the prescribed format; the manner and format of submission will be notified separately.
Discontinuation of Quarterly Reporting: Quarterly reporting on guarantees issued for Trade Credit has been discontinued from the quarter ending March 2026.
Amendments to Master Directions: Guarantee-related provisions in multiple Master Directions, covering External Commercial Borrowings, Trade Credits, Export and Import of Goods and Services, and FEMA reporting, have been amended accordingly.
Customer Awareness: AD banks have been advised to inform their customers about the new regulatory changes.
Legal Basis: The directions have been issued under the provisions of the Foreign Exchange Management Act, 1999.