RBI Permits Indian Banks To Offer Rupee Loans To Bhutan, Nepal, & Sri Lanka

New Delhi, Oct 14 (KNN) The Reserve Bank of India (RBI) has permitted banks in India and their overseas branches to extend loans in Indian Rupees (INR) to persons resident in Bhutan, Nepal, and Sri Lanka, including banks in these countries, in a move aimed at facilitating cross-border trade and payment transactions.

The central bank said the decision follows amendments to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 and the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015, as part of its ongoing efforts to liberalise and streamline external trade and payments, reported PTI.

“Authorised dealer (AD) banks in India and their overseas branches have been permitted to lend in Indian Rupees to persons resident in Bhutan, Nepal, and Sri Lanka, including banks in these jurisdictions, to facilitate cross-border trade transactions,” the RBI said in a statement issued on Monday.

The move is expected to enhance the role of the Indian Rupee in regional trade, particularly with India’s neighbouring economies that maintain close commercial and financial linkages.

In a related measure, the RBI also announced an extension in the repatriation period for unutilised balances in foreign currency accounts maintained by Indian exporters.

Earlier, exporters were permitted to open foreign currency accounts with banks outside India for realisation of export proceeds, with the requirement that unutilised funds be repatriated by the end of the month following the date of realisation.

“It has now been decided that the period for repatriation shall be extended up to three months, in case of foreign currency accounts maintained with a bank in the International Financial Services Centre (IFSC) in India,” the RBI added.

The announcement follows the central bank’s policy statement made on October 1, as part of its bi-monthly monetary policy, outlining measures to deepen trade settlement mechanisms and strengthen India’s integration with regional financial systems.

(KNN Bureau)