Central Bank Simplifies Cross-Border Borrowing and Guarantee Norms
The Reserve Bank of India (RBI) has issued updated guidelines under the Foreign Exchange Management Act (FEMA) to streamline corporate borrowing and bank foreign exchange operations. The revised ECB framework, effective from early 2026, has rationalized cross-border borrowing by expanding the list of eligible borrowers, simplifying reporting requirements, and adjusting interest cost caps.
Unified Net Open Position Rules to Take Effect in April 2027
Additionally, the RBI has simplified Net Open Position (NOP) calculations for commercial banks. Under the new rules, which will take effect on April 1, 2027, banks will no longer be required to calculate onshore and offshore forex exposures separately. Banks can also exclude eligible structural foreign currency investments, such as equity investments in overseas branches, reducing capital requirements.
