Indian Exporters Can Now Hold Foreign Currency Accounts Abroad

The Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Fifth Amendment) Regulations, 2025

The Reserve Bank of India (RBI) has introduced the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fifth Amendment) Regulations, 2025, effective January 14, 2025. This amendment enhances the flexibility for Indian exporters in managing their foreign currency earnings.

Key Provisions:

• Opening Foreign Currency Accounts Abroad: Indian exporters are now permitted to open, hold, and maintain foreign currency accounts with banks outside India. These accounts can be utilized for realisation of full export value and advance remittance received by the exporter towards export of goods or services.
• Utilization of Funds: Funds in these foreign currency accounts can be used for: Making payments for imports into India. Repatriating funds to India within a period not exceeding the end of the next month from the date of receipt, after adjusting for forward commitments.

Implications:

This amendment streamlines the process for Indian exporters by:

• Simplifying Transactions: Directly receiving export payments and making import payments through foreign currency accounts reduces the need for multiple currency conversions.
• Enhancing Cash Flow Management: Greater control over foreign currency earnings allows for better cash flow management.
• Reducing Transaction Costs: Minimizing currency conversion costs and international transfer fees.