RBI Amends FEMA Regulations to Simplify Overseas Investment Framework

The Reserve Bank of India (RBI) has amended the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 to streamline investment and repatriation norms for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other individual persons resident outside India. The amendments, notified through the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026, came into force on 13 June 2026.

The amendments primarily revise the mode of payment and remittance framework under Schedule III relating to investments by individual persons resident outside India, including NRIs and OCIs, and Schedule XI dealing with purchase or subscription of equity shares of Indian companies listed on international exchanges under the International Exchanges Scheme.

Under the revised Schedule III, RBI has clarified that investments on a repatriation basis may be made through inward remittances from abroad or from funds held in repatriable deposit accounts maintained in accordance with FEMA Deposit Regulations. The notification also requires every eligible overseas investor to designate a repatriable rupee account exclusively for investments permitted under the Schedule.

A significant change has been introduced for National Pension System (NPS) investments by NRIs and OCIs. The amended regulations now permit NPS subscriptions to be made not only through inward remittances and repatriable accounts but also through NRO accounts maintained under FEMA Deposit Regulations.

The RBI has also liberalised the treatment of sale proceeds. While proceeds from sale of equity instruments may continue to be remitted abroad or credited to the designated rupee account, proceeds arising from mutual fund units and NPS subscriptions can now be credited to any account maintained under FEMA Deposit Regulations at the option of the NRI or OCI investor.

The amendments further modify Schedule XI governing investments in equity shares of Indian companies listed on international exchanges. The revised provisions allow consideration for purchase or subscription of such shares to be paid either through banking channels to a foreign currency account maintained by the Indian company or through inward remittances and eligible repatriable foreign currency or rupee accounts maintained under FEMA Deposit Regulations.

The notification also clarifies that proceeds received by Indian companies from such subscriptions may either be remitted to a bank account in India or deposited in a foreign currency account maintained in accordance with FEMA regulations governing foreign currency accounts of residents.

Additionally, RBI has amended the reporting framework under Regulation 4. The revised provision now requires designated Authorised Dealer Category-I banks to report purchases or transfers of equity instruments by individual foreign investors, including NRIs and OCIs, on Indian stock exchanges through Form LEC (IFI).

The amendments are aimed at providing greater clarity on investment funding routes, account usage, repatriation options and reporting requirements for overseas investors while aligning the regulatory framework with evolving cross-border investment mechanisms under FEMA.

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