RBI Permits Rupee Lending to Bhutan, Nepal and Sri Lanka
Why in the news
The Reserve Bank of India widened the scope of rupee lending abroad on 1 October 2025, letting banks extend loans in Indian rupees to people in three neighbouring countries.
Key facts
- Permission: Indian banks and their overseas branches may lend in INR to residents of Bhutan, Nepal and Sri Lanka.
- Legal basis: amendments under FEMA, easing external trade and payments.
- Goal: smoother cross-border trade and wider international use of the rupee.
Related RBI steps
| Measure | What it says |
|---|---|
| IFSC accounts | Foreign currency accounts in IFSCs get up to 3 months to repatriate funds; this nudges exporters to open accounts in IFSC units |
| January 2025 permission | Exporters may hold foreign currency accounts outside India to receive export proceeds |
| Unused balances | Must be brought back by the following month-end |
Exam angle
- Regulator: RBI; law: FEMA.
- Countries covered: Bhutan, Nepal, Sri Lanka.
- Abbreviation: IFSC means International Financial Services Centre.