RBI Notifies FEMA
(Guarantees) Regulations, 2026, Replacing 2000 Rules and Tightening Reporting
Framework
·
The
Reserve Bank of India has notified the Foreign
Exchange Management (Guarantees) Regulations, 2026, superseding
FEMA 8/2000-RB,
with effect from their publication in the Official Gazette.
·
The
regulations govern guarantees involving persons
resident in India and non-residents, covering roles of surety, principal debtor, and creditor,
and prohibit such guarantees unless permitted under FEMA or RBI directions.
·
Exemptions include guarantees by overseas/IFSC
branches of AD banks (with no Indian resident party), irrevocable payment
commitments for FPIs via custodians, and guarantees issued under Overseas
Investment Regulations, 2022.
·
Residents
may act as surety or
principal debtor subject to eligibility under Borrowing and
Lending Regulations, with specific carve-outs for AD bank guarantees backed by
collateral, shipping/airline agents’ statutory guarantees, and
resident-to-resident guarantees.
·
Comprehensive
quarterly reporting is
mandated for issuance, modification, pre-closure, and invocation of guarantees
using the new Form GRN,
to be filed with AD banks within 15
days of quarter-end; AD banks must forward returns to RBI
within 30 days.
·
A Late Submission Fee
applies for delayed reporting: ₹7,500
+ 0.025% × amount × years of delay (rounded), incentivising
timely compliance.
·
Overall,
the 2026 regulations create a clearer,
consolidated, and enforceable framework for cross-border
guarantees, strengthening transparency, compliance, and regulatory oversight
under FEMA.