FEMA Guarantees Regulations 2026: New RBI Framework
Why in the news
In January 2026 RBI issued a single rulebook for guarantees involving persons resident outside India, framed under FEMA, 1999.
Who must follow
- AD Category-I banks when issuing, modifying or invoking such guarantees.
Key provisions
- Reporting: every guarantee issued, modified or invoked must be reported in a prescribed format, with manner and format to be notified separately.
- Supersession: earlier A.P. (DIR Series) circulars in the annexure stand replaced, giving one consolidated framework.
- Trade credit: the quarterly guarantee return is discontinued from the quarter ending March 2026.
- Master Directions amended: ECB, Trade Credits, Export and Import of Goods and Services, and FEMA reporting.
- AD banks must inform customers and ensure compliance.
Exam angle
- Parent Act: FEMA, 1999; applicable to AD Category-I banks.