RBI notifies the Foreign Exchange Management (Guarantees) Regulations, 2026

RBI notifies the Foreign Exchange Management (Guarantees) Regulations, 2026

RBI has notified the Foreign Exchange Management (Guarantees) Regulations, 2026. The Notification No. F. No. FEMA 8(R)/2026-RB dated 6^th January 2026 has been issued in exercise of the powers conferred by sub-section (2) of Section 6 and subsection (2) of section 47 of the Foreign Exchange Management Act, 1999 and it supersedes Notification No. FEMA 8/2000-RB dated May 3, 2000,

The Regulations lays down conditions for any person resident in India becoming a party (principal debtor, surety or a creditor) to a guarantee where any of the other parties to the guarantee is a person resident outside India.

Exemptions- These Regulations do not apply to the following: a guarantee undertaken by a branch of an authorised dealer bank outside India or in an IFSC, unless any of the other parties to the guarantee is a person resident in India. b. an Irrevocable Payment Commitment (IPC) issued by an authorised dealer in its capacity of a custodian bank, where the principal debtor is a registered Foreign Portfolio Investor and the creditor is an authorised central counterparty in India. c. a guarantee given in accordance with the Foreign Exchange Management (Overseas Investment) Regulations, 2022

Permission to act as a surety or a principal debtor- A person resident in India may act as a surety or a principal debtor for a guarantee, subject to conditions that –

(a) the underlying transaction for which the guarantee is being given or arranged is not prohibited under the Act or rules or regulations or directions issued under the Act; and

(b) the surety and the principal debtor are eligible to lend to and borrow from each other, respectively, under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time:

Provided that clause (b) shall not apply to a guarantee –

(i) given by an authorised dealer bank and covered by a counter-guarantee or issued against 100% collateral in the form of a deposit, from a person resident outside India; or

(ii) given by an agent in India of a shipping or airline company incorporated outside India on behalf of such company in connection with its obligation or liability owed to any statutory or Government authority in India; or

(iii) where both the surety and the principal debtor are persons resident in India.

Permission to obtain a guarantee as a creditor- A person resident in India being a creditor may arrange or obtain a guarantee in its favour, subject to the condition that where the principal debtor and surety both are persons resident outside India, the creditor shall ensure that the underlying transaction is not prohibited under the Act, or rules or regulations or directions issued under the Act

Reporting requirements- (1) Guarantees covered under these regulations shall be reported in Form GRN  –

(a) by the surety where he is a person resident in India; or

(b) by the principal debtor who has arranged the guarantee and where the surety is a person resident outside India; or (c) by the creditor where the surety and the principal debtor both are persons resident outside India or where the creditor has arranged the guarantee.

(2) The person having the obligation to report the guarantee shall report,

(a) issuance of guarantee,

(b) any subsequent change in guarantee terms, namely – guarantee amount, extension of period or pre-closure, and

(c) invocation of guarantee, if any, in the format provided at Annex to these regulations.

(3) Reporting, as provided in sub-regulations (1) and (2), shall be made to an authorised dealer bank on a quarterly basis within fifteen calendar days from the end of the respective quarter for onward submission to the Reserve Bank of India.

(4) An authorised dealer bank shall submit the returns received under this regulation to the Reserve Bank of India in the manner and format advised for this purpose within thirty calendar days from the end of the respective quarter.

Late Submission Fee for delayed reporting-

(1) A person resident in India who does not meet its reporting obligations, may do such reporting along with Late Submission Fee or make payment of Late Submission Fee where such reporting has been done with a delay.

(2) The Late Submission Fee shall be ₹ 7500 + 0.025% x A x n, rounded upwards to the nearest hundred, where, (a) “n” is the number of years of delay in submission, rounded-upwards to the nearest month and expressed up to 2 decimal points; and (b) “A” is the amount involved in the delayed reporting in INR.

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