RBI Issues 2026 Amendments to FEMA Non-Debt Instruments Regulations: Key Changes for NRI, OCI & Foreign Investors

The Reserve Bank of India has issued a fresh set of amendments to the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, through Notification No. FEMA. 395(4)/2026-RB dated June 13, 2026. These amendments bring significant changes to how individuals residing outside India — including Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) — make payments, repatriate sale proceeds, and comply with reporting requirements under India's foreign exchange regulatory framework.

The changes are effective from the date of publication in the Official Gazette and have been introduced by the Reserve Bank of India's Foreign Exchange Department, Central Office, Mumbai, in exercise of powers vested under Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999).

The Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, originally notified as Notification No. FEMA.395/2019-RB dated October 17, 2019, have undergone multiple rounds of amendments since their inception. The amendment history is as follows:

  1. Notification No. FEMA 395(1)/2020-RB dated June 15, 2020 — First Amendment
  2. Notification No. FEMA 395(2)/2024-RB dated April 19, 2024 — Second Amendment
  3. Notification No. FEMA 395(3)/2025-RB dated January 15, 2025 — Third Amendment
  4. Notification No. FEMA 395(4)/2026-RB dated June 13, 2026 — Fourth Amendment (current)

The 2026 amendment specifically targets Regulation 3.1 (covering Schedule III and Schedule XI) and sub-regulation (9) of Regulation 4, introducing structural refinements to the payment and reporting mechanism for cross-border investments.

Key Amendment 1: Schedule III — Investments by Individual Persons Resident Outside India (NRI/OCI) on Repatriation Basis

A. Mode of Payment — Revised Provisions

Schedule III of the Principal Regulations governs investment activity undertaken by individual persons residing outside India, including NRIs and OCIs, on a repatriation basis. The 2026 amendment replaces the existing Schedule III provisions entirely with a restructured framework. The revised payment mechanism now operates as follows:

(1) General Consideration Payments

The consideration amount for investments covered under Schedule III must be remitted either as an inward remittance from abroad through banking channels or sourced from funds maintained in any repatriable deposit account held in compliance with the Foreign Exchange Management (Deposit) Regulations, 2016.

This provision ensures that only legitimately repatriable foreign-sourced funds are deployed for investments on repatriation basis, maintaining the integrity of capital inflows.

(2) Designation of a Repatriable Rupee Account — A Critical New Requirement

One of the most operationally significant changes introduced by this amendment is the mandatory designation of a repatriable rupee account. Specifically:

An individual person residing outside India is now required to designate a repatriable rupee account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016, and such designated account must be used exclusively for all investments permitted under Schedule III.